Gold Faces Resistance: Consolidation Continues Amid Uncertainty

Gold Forecast Video for 12.06.23 by Bruce Powers

Not much new for gold today as uncertainty dominates. Again, gold tested resistance of both the uptrend line and 34-Day exponential moving average (EMA) with a high of 1,973 for a fifth day in a row. Volatility has declined as Friday is likely to complete a relatively narrow ranged day. Gold has been consolidating just below the resistance of both lines for the past five days. At the same time support of the 100-Day EMA has held up any further decline.

More Bearish Tone on Drop Below 1,932

The situation takes on a more bearish tone if gold drops to a new trend low on a move below 1,932. By then it would also be below the 100-Day EMA, an additional bearish sign. Nevertheless, targets where support might be seen are not too far down. The first is provided by the completion of an ABCD pattern at 1,925, where the CD leg of the decline matches the AB leg. This pattern is drawn on the chart. Lower down is the 61.8% Fibonacci retracement at 1,912. Then, if we extend the CD leg by the Fibonacci ratio of 127.2%, we arrive at a match. Both measures identify the same potential price level for support.

Let us keep in mind that if 61.8% level is reached gold will be moving lower and away from the 100-Day EMA. And it would be further below the 100-Day line than during the last test of support back in late-February to early-March. The 100-Day line is currently at 1,938. This would be bearish behavior. The significance of such a move would be determined by what happens next, following the drop to either the 61.8% level or the 1,925.

Price Correction May Have More to Go

A relatively sharp recovery back above the uptrend line and 100-Day line bodes well for the bulls. Alternatively, a continuation lower points to a deeper correction and likely longer recovery before gold is ready to test historical highs again. If the recovery is swift or gold rallies before moving to new trend lows, it should maintain underlying strength and begin to trend back up. Today’s high of 1,973 would need to be exceeded for a bullish signal, which would also put gold back above its 34-Day EMA, now at 1,972.

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