Gold (XAU/USD) Price Forecast: Rally Extends to Fresh Highs as Buyers Maintain Control

Record High Confirms Bullish Control

Gold extended its advance on Friday to a new record high of $4,550 and it set to end the session at its highest closing price historically. A new higher daily high and higher low further confirms that buyers remain in control. At the time of writing, there is also a chance that the new high breakout is further confirmed with a daily closing above Thursday’s high of $4,526. Friday’s bullish closing confirms a continuation of the long-term bull trend on a weekly basis and sets the stage for further bullish price action.

Momentum Slows Near Key Extension Level

Despite new record highs, a slowdown in momentum is indicated by the three narrow range days at the top of the trend. Friday’s advance broke above a 127.2% extension target at $4,516. That was a potential resistance zone, but it only stalled the ascent by a couple of days. A 161.8% measured move projection (AB = 161.8% of price change in initial AB leg) is next in line at $4,578 as a possible upside target. However, given a breakout above the 127.2% extension, the 161.8% extension of the October bearish correction becomes a potential target at $4,687. That level is bounded by a 350% measured move projection at $4,664 below, and a 423.6% extension at $4,713, which is from the long-term correction that followed the 2011 peak of $1,921.

Confluence Zone Acts as Upside Magnet

This $4,664 to $4,713 price range is highlighted since the range includes two long-term indicators and the three price levels are relatively close together. It is the confluence of indicators pointing to a similar price zone that seems to sometimes act like a magnet for price. Strength indicated by this week’s new high breakout will confirm with a strong weekly close today. Moreover, the price of gold is following through to new highs on the second breakout above a rising trend channel. The channel shows symmetry in the uptrend. A sustained advance above the top of the channel shows a new leg higher at elevated momentum. If sustained, it could be the early part of a possible blow of phase where momentum could spike.

Pullbacks Highlighted as Key Decision Zones

Nevertheless, the bullish indications are sure to be noticed by investors and draw attention to pullbacks that can be watched for setups to enter the trend. The recent new high breakout level at $4,381 and the 10-day average, also at $4,381 but rising, present the first more significant potential decision zone.

For a look at all of today’s economic events, check out our economic calendar.