Recent Bottom May Be Low for Gold Before Breakout of Long-term Base

Gold Forecast Video for 17.03.23 by Bruce Powers

It didn’t take gold long to get going once it initiated a narrow range bottom bullish reversal on March 9. Gold has advanced as much as 7.0% in five days as of the second bottom swing low (2) at 1,809. The high was 1,937, which completed a 78.6% Fibonacci retracement, and it was just shy of an 88.6% retracement. Subsequently, upward momentum has become more subdued as today’s activity forms an inside day (at time of writing).

Price Correction Likely Before Continuation Higher

The outlook on gold remains bullish but it wouldn’t be surprising to see a bit of a price correction before it attempts to continue the upward trend. Given the strength of the current rally a notable retracement would be common. Several potential support zones are placed on the chart for reference. The levels consist of Fibonacci retracements, plus prior weekly support, or resistance. In other words, each level is confirmed by both Fibonacci analysis and previous price structure (purple lines). A pullback down to the 61.8% retracement would put gold back at a weekly high and the breakout zone of a double bottom bullish trend reversal pattern.

Watch for Retracement Targets If Gold Weakens

If gold can end the week up near the top of the week’s range (top 25% or 30%), which is near where it is now, it has a chance to keep going higher heading into next week. The only immediate target remaining for gold is the top of the rising wedge at 1,960 (swing high). Of course, there are higher targets. These will be discussed more fully in the future. For now, in case gold does continue higher in the near-term, watch the 78.6% Fibonacci retracement around 1,973, followed by a prior monthly and swing high at 1,998.

Bullish Big Picture

In the bigger picture, a large cup with handle basing pattern has been forming in gold for more than 10 years. The larger the base the bigger the potential move once a breakout occurs. Until then the shorter-term swings are in the context of the larger base. This means that the recent double bottom may be the low until gold breaks out of its large cup with handle pattern.

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