Navigating Gold’s Volatility: Key Support Levels and Pattern Insights

Gold Forecast Video for 06.12.23 by Bruce Powers

Gold further retraced its prior advance today before finding support at 2,010. That low completed a 61.8% Fibonacci retracement of the most recent upswing, as well as support at the prior trend high. Both indicators point to the same price level and therefore today’s low is potentially a key support level. However, given how quickly gold has come down from Monday’s 2,135 peak and particularly the high volatility seen in one day, a deeper correction or consolidation would not be a surprise.

Gold Reached Potential Key Support

Today’s price action shows the retracement well in place and there are no bullish indications yet. Lower price levels to watch start with the last week’s support around 2,000 and then the 50-Day MA at 1,993, along with a prior swing high at 1,987.

The rally into Monday’s high of 2,135 reached the first target for a rising ABCD pattern at 2,131. This was a great example of the power of that pattern as it was almost an exact match and the reaction to price was classic. Today we look at a couple measured moves relative to the current rally.

Measured Moves May Offer Clues

The current full uptrend began from the September/October 2022 lows. There were two legs up on the way to the 2,082 peak that was reached in May of this year. The full move saw the price of gold rise by 27.8%. It began with an initial leg up of 21.2% followed by a correction of close to 50%. Subsequently, a new rally took gold up by 15.4% to the 2,082 high. Following the 2,082 peak gold moved into a 22-week correction that took it down to 1,810. When That correction took the form of a bull flag when looking from a wider perspective.

The two legs up in the current advance are addressed by the ABCD pattern, while the full advance from the 1,810 low to the 2,135 high was 17.9%. The potential exists for the current full move to match or exceed the first leg up of 21.2%, followed by a correction and then another rally. If correct, the current retracement may be over soon. In general, a drop below last week’s low of 2,000 will negate this potential bullish scenario.

For a look at all of today’s economic events, check out our economic calendar.