Gold Price Forecast: Short-Term Bullish Momentum but Resistance Looms

Gold traced out an outside day today as it continues to flirt with the 20-Day MA as resistance. Earlier in the session gold fell to a low of 2,305 where it encountered support the led to an upside breakout above Wednesday’s 2,337 high. Today’s high was 2,345, at the time of this writing. Gold closed just below the 20-Day line yesterday and it continues to trade around the 20-Day MA.

Short-Term Bullish

Nevertheless, today’s price action is short-term bullish and could lead to higher prices if today’s high of 2,345 is exceeded. If today’s bullish action continues gold would be heading up into a range of resistance around the recent swing high. The 8-Day MA is at 2,352 and this week’s high is at 2,389. This would seem to indicate a rally will likely encounter resistance before gold exceeds the recent record high of 2,431.

Resistance Around 20-Day MA Remains a Concern

Resistance was seen today, as well as the prior two days, around a top rising parallel channel line that previously was part of a support zone. In other words, the market is telling us prior support, represented by the line, may now be resistance. That is a small clue showing weakening in price.

Further, the 8-Day MA has turned down for the first time since mid-February, and it another sign that the short-term trend is weakening. It remains to be seen whether that weakening continues. A drop below today’s low would be the first sign of it. The recent swing low of 2,291 would then be at risk of being tested again as support, and it may fail leading to a deeper retracement.

April Closing to Provide Clues

Considering the monthly chart, gold is currently trading around the halfway point for the month’s trading range. If it closes the April at or below the 50% level, which is at 2,330 currently, it will end the month in a relatively weak position. March completed with a large green candle that closed near the highs.

It shows strong upward momentum that marks a breakout of a long-term base. Given the long-term breakout, it wouldn’t be surprising to see gold end the month in a strong position, above the 50% level. This may increase the chance for a continuation of the advance from this week’s low.

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