Gold (XAU/USD) Price Forecast: Breakout Opens Path Toward $4,891

Breakout Reshapes Gold’s Technical Picture

Gold made a decisive breakout above the 200-day moving average and downtrend line on Friday, putting it in a position to advance towards higher potential targets. This was followed by a bullish reversal signal above the lower swing high at $4,595 from late-May. The breakout occurred when the 200-day moving average and downtrend line converged, adding to the significance of the pivot zone. Gold is likely to close the session in a bullish position near the top of Friday’s range. Currently, the high for the session is $4,632. The low for the day at $4,509 tested support at the confluence zone before moving higher, reinforcing the significance of the breakout and adding to the potential for the advance to strengthen.

Spot gold daily chart shows concurrent breakout above downtrend line and 200-day moving average. Source: TradingView

Friday’s advance is a continuation of the breakout of a bullish pennant that triggered two days ago. The successful reclaim of the 200-day moving average on Friday shows a potential change in character for gold and provides additional confirmation that the recent correction may be complete. This puts higher targets in sight, as long as buyers can retain control. Given the bullish behavior of price since the internal trendline break on August 5, with the move now further confirmed by Friday’s breakout, there is the potential for gold to reach the initial key structure target near the lower swing high of $4,891 from April.

Spot gold daily chart shows larger trend structure. Source: TradingView

Multiple Upside Targets Emerge

Nevertheless, as gold approaches the April high, which may or may not be reached before a correction, there are two initial target zones to watch, beginning with a range from around $4,654 to $4,689. The first level is a measured move projection from the pennant pattern, while the second represents the 50% retracement of a prior decline. However, the standard-measure objective for a bull pennant suggests a potential upside target closer to $4,780. That level is supported as possible resistance by the 50% retracement of a larger downswing near $4,771. The nearby lower swing high at $4,774 also marks a prior price reference.

Support Holds Key to Continuation

Of course, key support is at the 200-day moving average, now at $4,516, along with Friday’s higher daily low of $4,509. Holding this support zone would help preserve the breakout and keep the higher targets in play. If it continues to hold as support, gold’s long-term bull trend may be ready to reassert itself, extending the change in character signaled by Friday’s decisive breakout.