Gold (XAU/USD) Price Forecast: Gold Pulls Back: Sellers Test Bulls After Record High

Bearish Reversal Signals Emerging

Gold‘s relentless climb hit a speed bump today as sellers seized control, sparking a one-day bearish reversal. The session carved out a lower high and lower low, with prices lingering near the day’s bottom at $3,944 as of this writing. A daily close below Wednesday’s low of $3,983 would confirm this shift, likely locking gold in the lower quarter of today’s range.

This pullback follows yesterday’s probe of resistance at a record high of $4,059, kissing the upper boundary of a rising parallel channel with the lower boundary line connecting the December 2024 lows. With the Relative Strength Index (RSI) flashing overbought, the stage is set for a test of support near the 10-day moving average, currently at $3,900 and climbing.

Weekly Pattern Hints at Weakness

If selling pressure persists into Friday, the weekly chart could flash a bearish signal. A close below the week’s midpoint at $3,972 would confirm relative weakness. This won’t be too surprising given gold’s 24% surge ($785) since the July 31 low. The price action around the 10-day average will be telling – sustained demand has kept corrections shallow so far, but a deeper pullback or prolonged consolidation would signal a healthy reset for the long-term uptrend. A daily close below the 10-day line raises the odds of a more meaningful correction, with the 20-day moving average at $3,800 as the next dynamic support zone.

Channel Dynamics and Correction Risks

Yesterday’s touch of the upper channel line, paired with today’s reversal, suggests the rally may be overstretched. Overbought RSI reinforces the case for a breather, likely driving prices toward the 10-day average or beyond if momentum fades. A single day’s decline doesn’t break the bullish trend, but it’s a warning shot – especially after such a sharp advance. If buyers fail to defend the 10-day line, expect a probe of $3,800, where stronger support awaits. Conversely, a decisive rally to a new trend high would flip the script, invalidating the bearish setup.

Looking Ahead

Gold’s uptrend remains intact, but today’s action demands caution. Watch Friday’s close for confirmation of weakness or a bullish rebuttal. The 10-day average is the line in the sand – its breach could trigger a deeper pullback, while a bounce keeps the bulls in charge for now.

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