Gold’s Bullish Rally Continues with Potential for New Highs

Gold Forecast Video for 06.04.23 by Bruce Powers

Gold advances to a new trend high before hitting resistance 2,032. That resistance should be minor however, as gold remains at or above the 88.6% Fibonacci retracement level, which is at 2,018. Given Tuesday’s upside breakout of a bullish pennant chart pattern, gold is expected to continue to advance, and could potentially reach new highs in the current rally.

Gold Hit New Trend High, Targets 2,158 & 2,194

The initial minimum target derived from the bull pennant is 2,158. A second and slightly higher target is at 2,194. That price level is the 127.2% Fibonacci extension of the correction off the March 2022 swing high. Other targets noted on the enclosed chart are Fibonacci extensions of the most recent correction off the February 2 swing high. In this case, the 161.8% extension is at 2,044, followed by the 227.2% extension at 2,133. The next higher Fibonacci extension target is at 2,181, very close to the 2,194 target.

Trade Plan Should Consider Risk Management and Time Horizon

When using technical analysis, the longer the time frame being referenced, the potentially more significant the price levels. The price levels noted above include results from a long-term pattern (2,194), and the remaining from short term patterns of prior price action. Therefore, the use of these price levels will depend on your strategy, time horizon, and risk management protocols. When looking at a trade plan, price targets are the least reliable component, which should be kept in mind.

Intraday Signs of Reversal and Momentum Should Considered

Nevertheless, they can provide some guidance by watching price action around the price levels or potential resistance. Does momentum slow? Are there intraday signs of reversal? Does price plow through the level and keep going? These are just a few questions traders should consider.

Breakout of 12-Year Base Would be Significant

Gold is no longer in the shadows and now on everyone’s radar, it seems. Therefore, there may not be an ideal place to enter gold before it breaks out to new highs. Another key pullback may not occur before new highs. New highs will see gold advance out of a 12-year base. That will be significant as long-term base breakouts can see price accelerate and keep going as those on the sidelines feel compelled to enter or risk missing out.

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