Gold (XAU/USD) Price Forecast: Faces Pullback Risks Amid Slowing Momentum

Gold Consolidates After Record High

Gold paused its advance this week after notching a new record high of $3,791 on Tuesday. That level sits within a critical confluence zone between $3,782 and $3,812, marking the first major resistance cluster since the breakout above $3,500. Wednesday saw a one-day pullback, followed by Thursday’s consolidation inside the prior session’s range, underscoring growing caution among buyers.

Potential for Short-Term Pullback

Despite strong demand that has powered the rally since August, gold now faces a test of near-term support. The 10-Day moving average at $3,699 represents the first level to watch if sellers regain control. A decline to that level would not charge the characteristics of the uptrend unless it fails to hold as dynamic support.

If buyers can defend the 10-Day average and press higher, the upper boundary of the range remains a valid short-term upside target. That would require renewed momentum and steady demand, possibly following a period of upward-sloping consolidation.

Broader Support Levels in Focus

Below the 10-Day, the 20-Day moving average at $3,633 offers a deeper level of dynamic support. A retracement into that zone would align with a more sustainable digestion of the recent advance, which totaled nearly $480, or 14.5%, from the August swing low. The RSI is already flashing bearish divergence, a typical signal of waning momentum after such a strong move.

Additional support sits at $3,684, the week’s low, and near the 38.2% Fibonacci retracement at $3,609. A sharp dip into that area, followed by a swift recovery, could reset the market for a renewed advance.

Friday Close May Prove Key

Heading into the week’s end, the closing price on Friday may provide an important signal. A finish in the lower half of the weekly range, particularly below $3,737, would emphasize weakening momentum and raise the probability of a deeper retracement. Conversely, a recovery into the upper range could maintain the bullish outlook.

Overall, gold’s primary trend remains higher, but after a rapid surge, consolidation or corrective action appears necessary to sustain the advance.

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