Gold (XAU/USD) Price Forecast: Bullish Recovery Eyes $5,000 Confluence Zone

Reclaiming Key Moving Averages Signals Strength

Gold extended gains to a high of $4,793 on Wednesday, as it tested resistance near the 20-day moving average for the first time since it broke below it in the first half of March. Strength during the current advance was indicated by a recovery of the 100-day moving average on Tuesday, followed by a recovery of the top boundary line of a rising trend channel. The 10-day moving average was recovered on Tuesday as well, reinforcing improving near-term momentum and setting the stage for a test of higher resistance levels.

Momentum Builds Through Breakout Levels

Given these signs of bullish momentum, further upside is possible as potential resistance levels are exceeded. On the way to the 20-day moving average gold, broke through the 50% retracement level at $4,746, another sign of strength. A recovery of the long-term trend indicators, the 100-day moving average and the top channel line, looks likely to be confirmed with a daily close above the zone. That would set the stage for higher prices, as long as that zone, roughly $4,687 to $4,642 today, is retained as support.

Pullback Risk Within Bullish Structure

A successful test of the 20-day moving average on the first approach is to be expected, and it could lead to a minor pullback towards the $4,687 support zone and consolidation. If that zone holds as support, then a breakout signal above today’s high and the 20-day average, now at $4,802, would increase the likelihood of eventually testing the 50-day moving average as resistance. The 50-day average has greater significance, as it previously marked support for the uptrend since October 2023, until it failed a few days after the 20-day average.

Measured Move Targets Key Confluence Zone

The current rally is in its second leg up, following a strong reversal from support near the long-term 200-day moving average last week. Support was also indicated by the midline of a large rising channel and the lower line of a more recent descending channel. Strong subsequent demand was confirmed this week, and a measured move suggests a potential upside target of $4,874. That is close to the 61.8% Fibonacci retracement at $5,000, while the 50-day average is falling towards that $4,874-$5,000 potential resistance zone. It is now at $4,954, reinforcing the importance of this confluence area.

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