Bearish Break Below $4,500 Triggers Correction
Gold triggered a continuation of the bearish correction on Monday, as it fell below the swing low at $4,500 from early in May to reach a low of $4,453. Buyers took back control intraday after that, with trading continuing near the highs of the day, now at $4,552, at the time of writing. This puts it in a likely bullish position for the day but also establishes a lower high and lower low, which keeps the short-term bearish structure intact.
Breakdown Confirmation Meets Intraday Recovery
The bearish continuation initially triggered on Monday with a small decline below the prior trend low of $4,500. Then, the bearish signal was confirmed on Tuesday with a close below that prior low. However, Wednesday’s intraday bounce and likely close above $4,500 shows that bearish momentum is sluggish, which presents a possibility of a bounce before further downside, if that is what follows. If buyers can retain control and get above Tuesday’s high of $4,589, then the 20-day moving average near $4,627 or the 50-day moving average near $4,681 could be tested as resistance on a bounce.
Resistance Zones Define Potential Upside Ceiling
Resistance is anticipated on a bounce, given the bearish corrective structure currently in place. There would need to be a sustained reclaim of the 50-day moving average for that possibility to start to change. The 50-day moving average was tested during the prior advance in May and it therefore presents an obvious upside target zone. If resistance is seen lower, however, near the 20-day moving average, and it is followed by a decline, that will show bearish momentum becoming stronger.
Support Structure Builds Below Current Range
There is a key potential support zone for gold that starts around the February low of $4,401 and goes to the 200-day moving average, now near $4,366. Underlying bearish momentum has been rising, which can be seen by the increased angle of descent of an internal downtrend line that connects to the May lower swing high.
Broader Structure Still in Corrective Phase
Importantly, despite the short-term bounce, price action remains structurally corrective unless a decisive reclaim of major moving averages occurs, meaning the broader consolidation phase is still developing rather than resolving.
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