Gold’s Retreat: Analyzing Key Support Levels and Potential Reversal

Gold Forecast Video for 13.11.23 by Bruce Powers

Gold’s retracement continued today reaching a low of 1,933 and completing a 38.2% Fibonacci retracement almost exactly. A small bounce followed but there is no sign yet of a bottom. Today’s low is in an area of potential support marked by the Fibonacci level at 1,933, as well as the 50-Day EMA at 1,938. At the time of this writing downward pressure remains as trading remains near the session’s lows.

A Bounce Off the 38.2% Retracement Indicates Strong Demand

A bounce off the 38.2% retracement would indicate stronger demand than if the retracement falls to the next lower target zone. The next lower zone is from around 1,916 to 1,910, consisting of two Fibonacci levels and the 200 Day EMA that starts the range. Certainly, given that it is looking like gold will end the week near the lows of today’s range, a continuation lower is a real possibility heading into next week.

Initial Impulse Leg Up May Provide Clues

When considering the retracement and potential support levels a review of the initial impulse leg seen in the larger uptrend may provide clues. The initial leg up started from the November 3, 2022, low. Over eight days gold advanced by as much as 10.6%. A retracement to the 38.2% level followed. That led to a bullish reversal and continuation of the rally for a second advance of 13.5%.

By comparison, the recent rally saw the price of gold advance by 11.0%, very close to percentage advance in the initial impulse leg up. Gold is now testing support of the 38.2% Fibonacci level. Might a similar situation occur with a bullish reversal off the Fibonacci level? Let’s see. Nonetheless, further signs of a bottom will be needed, plus a bullish setup.

First Test of 50-Day EMA

Today’s decline is the first test of the 50-Day EMA (orange) as support. However, although gold has stalled its descent around the Fibonacci zone, it is trading a little below the 50-Day line now and will likely close below it. Therefore, a drop below today’s low heading into next week will indicate a failure of the 50-Day EMA to act as support.

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