Gold’s Potential Reversal: A Second Test of Lows Before a Bullish Surge?

Gold Forecast Video for 07.07.23 by Bruce Powers

Gold pulled back to the area of the 78.6% Fibonacci retracement today before bouncing. The low for the day was 1,903. Today could end a second test of recent lows as support before gold is ready to reverse higher and then see sustained strength. Support is around the 200-Day EMA at 1,897 and previous trend low at 1,893.

Downtrend Remains in Place

The precious metal remains in a clear downtrend since the May 4 peak and is below the 34-Day EMA. There is a series of lower swing lows and lower swing highs, as well as a series of weekly declines. Yesterday, gold attempted to break out above last week’s high as it rose almost 2 points above the prior week, but quickly failed. It also got above the downtrend line for a period. Selling intensified into Thursday and gold subsequently completed a 78.6% retracement today.

A Rally Above Last Week’s 1,933 Needed for Bullish Signal

A rally above last week’s high of 1,933 provides a weekly bullish signal. Especially, given the sharp reversal following a break above that high yesterday, a daily close will be needed to confirm strength of the breakout. Once a daily close occurs above 1,933, a bullish reversal in gold should be confirmed. However, further signs of strength will then be needed for signs of strengthening.

Following a daily close above last week’s high, next watch for a daily close above the 34-Day EMA, now at 1,940, for confirmation of strength. Gold fell back below the 34-Day line in mid-May, tried to rise back above it in June, and then made another attempt this week before failing and turning back down.

By Monday, This Week’s High of 1,935 is the Pivot Level

If gold does not get back above last week’s high before the end of this week, then this week’s high of 1,935 takes on greater importance. As of next week, a daily close above this week’s high will be needed to confirm strength on the weekly time frame, rather than last week’s high. A move above last week’s high will be a sign of strength but since this week rose above that high, this week’s high will be of greater value.

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