Gold Price Forecast: Faces Resistance, Eyes 50-Day MA

Bruce Powers
Published: May 24, 2024, 20:25 GMT+00:00

After reaching support at 2,325, gold bounces to 2,347 but finds resistance, suggesting further decline towards the 50-Day MA.

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Gold stalled its bearish retracement today with a narrow range day after dropping briefly below yesterday’s low to reach support at 2,325. Subsequently, an intraday bounce found resistance at the 20-Day MA with a high for the day at 2,347. Both the narrow range day with consolidation near the lows of Thursday’s trading range and a successful test of prior support as resistance, are potentially bearish indications that may occur in downtrends.

Further, trading is occurring back near the lows of the day at the time of this writing, and therefore gold may close weak, in the bottom third of the day’s range. And unless something changes in the next few hours it will end the week with a large red candlestick pattern, closing near the lows of the week.

A graph with lines and numbers Description automatically generated with medium confidence

Weekly Breakdown Triggered

Yesterday, gold triggered a breakdown below last week’s low of 2,332. A daily close below that price level will confirm the bearish implications. But it will then depend on what happens after that. Nevertheless, given today’s sustained selling pressure it looks like the 50-Day MA around 2,309 is next on the agenda. The successful test of resistance at the 20-Day line today is a small clue that the retracement is likely to continue to lower prices.

Whether it has the potential to fall below the 50-Day MA remains to be seen. Certainly, it is an important trend indicator for the current advance especially since the 20-Day line has failed to stop the decline. Yesterday’s selloff was clear with little hesitation as the 20-Day line was broken.

Anticipating Test of Support at 50-Day MA

If support can be found at or above the 50-Day MA, a continuation of the rally may follow. However, a sustained drop below it puts the recent swing low at 2,277 from early-May at risk of being broken. If that happens the price structure of the uptrend is violated as it is a higher swing high. There are less significant potential support levels just below the 50-Day line but above the early-May swing low. The 50% retracement of the internal uptrend is at 2,289 and a top trend channel line is a little higher from there.

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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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