Analyzing Gold’s Decline: Where Will Support Emerge?

Bruce Powers
Published: Sep 6, 2023, 20:28 GMT+00:00

Gold's correction deepens with a retracement to 50%, raising concerns for a further decline. Key support at 1,911 to 1,909 and an uptrend line at 1,903 provide hope for a bullish reversal.

Gold, FX Empire

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Gold Forecast Video for 07.09.23 by Bruce Powers

The correction in gold deepens today as the 50% retracement is completed at 1,918 and a new pullback low of 1,915 is reached. Subsequently, a minor intraday bounce triggered off the day’s low. Nevertheless, gold is set to close weak, in the lower quarter of the day’s range and possibly below the 50% retracement level. This tells us that the retracement is not over and increases the chance for a decline to a lower support zone.

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Confluence Marks Next Support Zone

Confluence of the 61.8% Fibonacci retracement and the 200-Day EMA is at 1,911 to 1,909, respectively. It marks the next lower price zone to watch for signs of support that may lead to a bullish reversal. Recently, gold spent seven days trading back below the 200-Day line after being above it since December. The current decline is the first real test of the line as support since the rally back above the line that occurred on August 23.

Weekly Pattern Plays a Role

Also of interest is the weekly low of 1,913 from last week. A drop below the weekly low, which will happen if the next lower target zone is reached, shows a weakening of the underlying uptrend. Last week a bullish reversal on the weekly chart triggered on a rise above the previous week’s high of 1,923. Such a bullish signal should be followed by additional signs of strength if the signal is valid and provides an early sign of what’s to come. Regardless, a quick drop below the weekly low followed by a daily close above the low would point to a quick resolution and would be a minor sign of support. Otherwise, a daily close below the weekly low could lead to a deeper retracement.

Lower Support Around Uptrend Line

Following the completion of a new swing low two weeks ago at 1,985 a new uptrend line was added to the chart. It marks dynamic support for the uptrend. If a deeper retracement occurs, triggered by a drop below today’s low of 1,915, potential support around the uptrend line can also be watched. Currently, the price represented by the line for Thursday is around 1,903.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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