Gold (XAU/USD) Price Forecast: Bearish Engulfing Shows Sellers in Charge

Bearish Engulfing Pattern Marks Reversal

Gold’s Thursday session highlighted a sharp momentum shift, as the metal’s attempt at a three-day bullish reversal ended abruptly. After rallying early in the session to a three-day high of $3,375, sellers stepped in decisively, driving prices back toward the day’s low at $3,330. The bearish engulfing candlestick formed on the daily chart reflects a total rejection of higher levels, leaving sentiment skewed toward further weakness.

Price Action and Confirmation Levels

At the time of this writing, gold remains near session lows and is set to close in the lower quarter of the day’s trading range – an additional sign of selling pressure. A daily close below the prior low of $3,331 would confirm the bearish continuation and validate Thursday’s failure to sustain buying momentum.

Triangle Consolidation Approaching Key Support Zone

Gold’s recent swings have unfolded within a symmetrical triangle consolidation pattern near record trend highs, with the lower boundary currently near $3,300. This level aligns closely with a key support indicator – the higher swing low at $3,268 from late July. A clean drop below both levels would represent a technical breakdown from the triangle pattern, opening the way for deeper downside.

Fibonacci and Moving Average Levels in Play

If prices breach $3,268, traders will be targeting the 38.2% Fibonacci retracement level at $3,159 – a zone that held as support during the first bearish pullback from April’s record $3,500 high. Adding to the importance of the $3,300–$3,310 area is the positioning of the 20-Week moving average at $3,310, which acted as a bounce point in July and now sits just above the triangle’s lower boundary.

Upside Breakout Needs Strong Momentum

For the bullish case to regain credibility, gold must reclaim $3,39 – a recent lower swing high—as an early signal of strength. A decisive breakout from consolidation requires a rally above $3,439, the triangle’s upper boundary. Until that occurs, price action within the triangle will likely remain choppy and less reliable for directional trades.

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