Gold Price Forecast: Short-Term Strength Tested Amid Key Fibonacci Resistance

Gold rallied into resistance at $3,036 on Tuesday as it retraced the recent small decline. A 61.8% retracement was completed at $3,043 before resistance was seen and gold turned back down intraday. The low for the day was $3,007 gold is set to establish a higher high and higher low for the day. At the time of this writing, gold is at risk of closing in a relatively weak position, below the halfway point for the day’s trading range. That would be at $3,021.64.

Tuesday’s Price Range Has Key Price Levels

Following a new record high of $3,058 reached last Thursday, gold dropped to a low of $2,999 on Friday. That remains the low of the bearish pullback so far, which is not much. Near the record high for gold is the 200% extended retracement of the late-October bearish correction at $3,043. There looks to be two basic scenarios now developing in gold.

Either the bull trend continues towards a higher target, or a bearish correction continues. A higher daily high and higher low today showed short-term strength following a very minor decline. But a bearish reversal intraday at the 61.8% retracement and subsequent decline intraday suggests the possibility that a continuation of the pullback may follow.

Above $3,058 Targets $3,080

A rise above today’s high of $3,036 will show strength but gold would need to get above last Friday’s high of $3,047 before there is an indication that gold may challenge the recent high before a deeper pullback. If gold can subsequently exceed the record high it should have a chance to approach the next higher target around $3,080, which shows confluence of a couple Fibonacci levels. In addition, there is a top trend channel line (green highlight) that may present resistance a little above the higher price target.

38.2% Fibonacci Retracement and 20-Day MA Support

On the downside, a drop below Tuesday’s low of $3,007 indicates a likely deeper pullback while that is signaled on a drop below Friday’s low and the weekly low at $2,999. Downside initial targets include the 38.2% Fibonacci retracement at $2,972 and the prior trend high at $2,956. Notice that the 20-Day MA has converged with that prior high and it continues to rise. The 20-Day line is at $2,955 and it also presents an important short-term pullback target.

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