Gold Price Forecast: Falls Further After Record High, Eyes Key Support Levels

Gold lost its upward momentum and fell below the lows of the past two days before finding support at a three-day low of 2,375. However, trading remains near the lows of the day at the time of this writing. Sellers took control today following Monday’s new record high of 2,450. That day closed weak, with the price of gold ending in the lower half of the day’s trading range. Nonetheless, it is fast approaching initial potential support levels for the uptrend.

Three Trendlines for Support

There are several trendlines that converge around 2,364 to 2,356. A little lower is the 20-Day MA at 2,348. How gold reacts to the 20-Day line will be telling. It was broken for a little more than two weeks in April before gold rallied back above it on May 9. Support was confirmed over the next few days before it began to rise again leading to a new record high. If today’s weakness leads to a retest of support around the 20-Day line and price is rejected to the upside, the trend structure will be maintained. Or, if support is seen above the 20-Day MA.

Weekly Uptrend Intact Until 2,332

Further, last week’s low is at 2,332 and it provides another lower possible support area. The weekly chart (not shown) has an uptrend in place with this week being the third with a higher weekly low and higher high. Therefore, it is another key price level to watch if the retracement eventually starts to approach that price zone. On the daily chart the weekly low is the most recent swing low where the 20-Day line was tested as support.

Watching Reaction to Support Levels

Until proven otherwise, the uptrend can be anticipated to continue following a pullback. A daily close below the 20-Day MA might change the near-term situation. It would put the current uptrend structure at risk of changing the slope of the ascent. As discussed previously, the current advance from the most recent swing low made a second attempt to breakout from two rising parallel trend channels. The more significant line is the longer one that marks support around 2,364 if was reached today.

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