Gold’s Dilemma: Hovering Below Key Support as Uncertainty Increases

Gold Forecast Video for 29.01.24 by Bruce Powers

The price of gold remains in a precarious position sitting just below the 50-Day MA (orange), which identifies dynamic support for the uptrend. You can see how today’s high of 2,027 tested for resistance at the 50-Day line before pulling back. Similarly, Thursday’s high also specifically tested the 50-Day line and was rejected to the downside.

Watch for Small Pennant Consolidation Breakout

Price action over the past week and a half has taken the form of a small symmetrical triangle or pennant. Therefore, it can be used to identify signs of strength or weakness earlier than the alternative price levels. For example, the trend low is at last week’s low of 2,002, and a drop below it triggers a bearish trend continuation. However, a breakdown below yesterday’s low of 2,009 triggers an early bearish signal on a move out of the pennant consolidation. It would provide an earlier signal that still has a strong likelihood of dropping through the 2,002-price level and continuing lower.

Bearish Continuation Targets 1,964 Price Zone

It is possible that a bearish continuation may eventually test the 200-Day line as support around 1,964. Along with the 50% retracement at 1,973, and the 127.2% Fibonacci extension of the falling ABCD pattern at 1,967, a price zone from 1,973 to 1,964 is identified. A drop down to that price zone could provide a flush out of weak holders before gold is ready to progress its uptrend to test record highs. Given the long-term chart patterns the expectation is for an eventually rally to new record highs. However, it is starting to look like a deeper selloff may come first.

Initial Upside Targets

An upside breakout is first triggered on a rally above 2,037 and then confirmed once price gets above 2,039. Once above 2,039 gold will have recovered its trend lines and moving averages. It then needs to stay above those lines to remain in a bullish posture. The first higher resistance targets would then be at 2,062 (C), followed by 2,088. A daily close above 2,062 will signal a reversal of the down bearish price correction.

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