Gold Price Forecast: Buyers Hold Ground as Gold Tests Critical Price Levels

Gold busted through the 50-Day MA on Thursday, reaching a high of 2,674 before stalling the ascent. That high was around potential resistance of the 20-Day MA at 2,677. A daily close above the 50-Day line at 2,661 will indicate greater strength than a close below it. The 20-Day line may continue to act as resistance but there are also a couple identified price levels a little higher at 2,686 and 2,692.

If gold can continue to rally, a daily close above the 20-Day line would provide the next indication of strength, followed by a daily close above 2,692. Until there is a daily close above last week’s high of 2,686, however, the expectation remains for an eventual bearish pullback once significant resistance is encountered.

Testing Resistance Around 20-Day MA

The 20-Day MA had done a good job of defining trend support before the breakdown, since it was reclaimed on August 8. Notice that last week’s breakdown fell through the 20-Day MA at the same time as the internal uptrend line was broken to the downside. Further weakness was indicated on the drop below the 50-Day MA and then the next lower uptrend line. Therefore, a pullback looks likely once prior support levels are tested as resistance. That could occur at the levels noted above, including the 2,710-swing high. For now, the buyers remain in charge.

Near-term Support at 2,648

A decline below today’s high of 2,648 signal weakness and the possibility of a deeper pullback. The prior swing low, also a monthly low, looks to be the first key support level that may be tested on the way down. Both the low from Wednesday at 2,619 and from Tuesday at 2,610 can also be watched for signs of further weakness or potential support that is above the swing low.

Inside Week Likely

Gold will likely end this week with an inside week pattern. Until gold either drops through the bottom of the week at 2,564 or the top, currently at 2,674 (week not over), it will remain inside the week’s range and therefore choppy trading and consolidation on the shorter daily time frame may dominate for a little while. As noted previously, this week’s low bounced right off a test of the support at the 20-Week MA, while last week’s low closed at support of the moving average last week after a minor dip below the line.

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