Gold (XAU/USD) Price Forecast: Bearish Momentum Pushes Below 50-Day Average

Break Below 50-Day Average Confirms Bearish Continuation

Gold continued to weaken during Wednesday’s session, as it broke below the 50-day moving average with a sharp decline to $4,834. At the time of writing, gold continues to trade near the session lows, and the move may extend further before the close. Support is being tested at that higher swing low of $4,842, which helped define a rising bearish wedge formation. Today’s breakdown confirms a continuation of a small bear flag that followed a break of the rising wedge two weeks ago.

Decisive Breakdown Threatens Lower Support Levels

A drop below the 50-day average is potentially significant in the near-term since it has held as dynamic support ever since it was reclaimed in August of last year. It has defined trend support since then, including during the recent sharp three-day drop to $4,402, which established a higher swing low. Given the decisive breakdown below the 50-day line, lower key support levels are likely to be tested before strong support emerges. The reaction of price near an uptrend line will give the next clues about supply and demand.

100-Day Moving Average Offers Critical Support

The next key support level is defined by the rising 100-day moving average at $4,588. It has provided broader trend support since it was last reclaimed in October 2023. Therefore, if strong support is not seen above the 100-day average, there is a good chance that this first approach since August will find buyers. Additionally, since the top of a long-term channel was confirmed once as support, with the February low, it is reasonable to expect it to hold again.

Sellers Remain in Control

Sellers remain in charge with bearish momentum poised to continue or potentially accelerate. An acceleration was observed in the first leg down from the $5,597 peak in January. A second leg down began with the rising wedge trigger. Note that selling was aggressive, reflected in long-range daily declines and the drop to a seven-day low in one day.

Resistance Bounces Likely to Meet Selling Pressure

A bounce to test resistance near the 50-day average at $4,972 is anticipated to be met by selling pressure, resulting in another turn lower. Nonetheless, a bounce could reach up to the 10-day average at $5,068 before there was convincing signs that buyers were taking control, potentially linking back to the initial breakdown and setting the tone for near-term trend continuation.

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