Gold (XAU/USD) Price Forecast: Bearish Pressure Builds After Breakdown

Fibonacci Support Under Pressure

Gold extended its decline on Tuesday to a low of $4,237, as it further tested support near the first downside target zone defined by the 78.6% Fibonacci retracement of the prior upswing. That initial downside target at $4,262 was hit on Monday and briefly undercut on Tuesday but looks poised to close the session at or above support near the retracement. In addition, on the weekly chart, the 10-period moving average provides additional confirmation of support at $4,246, as it is currently positioned near that level. This suggests that support may continue to hold, potentially leading to a rebound to test prior support as resistance.

Resistance Levels in a Potential Rebound

A key resistance zone on a bounce is indicated near the prior trend low of $4,366 and the 200-day moving average, now near $4,442. However, since the 10-day moving average is starting to cross below the 200-day line, it will soon represent initial dynamic resistance within the broader trend structure. There is also last week’s lower weekly high of $4,546 that marks a key resistance zone as a recovery above it would signal a weekly reversal.

Breakdown Below the 200-Day Moving Average

Despite the potential for a bounce, a significant bearish signal was triggered in gold on Friday when price fell sharply below the long-term dynamic support indicator – the 200-day moving average. Trading has not occurred below that average since it was reclaimed in October 2023. A decisive drop below it suggests a significant weakening of the bull trend and a likely test of support near lower prices.

Lower Structure and Trendline Risk

The next lower target zone is defined by the lower uptrend line and the higher swing low from March at $4,097. That low helps define the broader trend structure, and a drop below it would signal a trend reversal of the uptrend and a continuation of the developing declining trend channel. If the March low fails as support, then the higher swing low near $3,929 from October becomes a downside target. Since the March low is near the lower and therefore longer uptrend line, a drop below it would also be a failure of trendline support.

Momentum Shift in Progress

Overall, while near-term conditions still allow for a potential rebound from Fibonacci and moving average support, the break below the 200-day moving average continues to define the broader shift in momentum toward a weakening bullish structure, with downside risk remaining the dominant medium-term consideration unless resistance levels are reclaimed.

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