Gold Price Outlook – Gold Continues to See Consolidation

Gold Technical Analysis

The gold market has rallied slightly during the early hours on Friday as we continue to hang around the $4,000 level. The $4,000 level, of course, is an area that a lot of people will be watching closely and is a large, round, psychologically significant figure that causes some headline volatility. At this point, we should be watching what happens next through the prism of sitting and waiting. After all, we had shot straight up in the air for quite some time and then had this massive sell-off.

We are now just dancing around the crucial $4,000 level, which is an area that makes perfect sense to consolidate at and try to work off some of the froth via time spent at this level instead of selling off. That being said, if we were to break down below the 50-day EMA, I think we would visit the $3,800 level, which was the measured move of the breakout from the ascending triangle we had been in. A breakdown below opens up a move to $3,500 level, which would cause serious concerns about the overall trend in this market.

On the other hand, if we do break to the upside, watch the $4,200 level—that could be a significant barrier. But as things stand right now, I think the best bullish case scenario is to simply stay right around this $4,000 level and sit here, letting the market get used to these prices and letting traders accept the fact that gold is $4,000 an ounce. Eventually, that could attract fresh money back into the market.

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