Gold (XAU/USD) Price Forecast: Rebound Faces Larger Bearish Setup

Short-Term Reversal, Bigger Picture Unchanged

Gold triggered a one-day bullish reversal on Thursday, reaching a higher daily high of $4,647 and establishing a higher low at $4,539. That is the first higher daily high and low for gold in 11 days. Nonetheless, the dominant short-term pattern remains a rising bearish wedge. That pattern triggered to the downside on April 21, resulting in a minor swing low at $4,510 on Wednesday, which was just above the 50% retracement of the prior upswing at $4,496. Although the reversal may support a near-term bounce, lower targets have not been reached and are still expected to follow that rebound.

Resistance Levels in Focus

After the bearish trigger and downside follow-through, an upswing to test prior support zones as resistance is common and expected behavior. The first level at the interim swing low of $4,640 was successfully tested on Thursday, while further upside could extend toward the 100-day moving average, now at $4,761 and rising slightly. There is also the 20-day moving average at $4,721, which currently represents the more actionable near-term trend indicator. It provides the most useful near-term moving average given its confirmation as both support and resistance several times since the April 2 high, when it was tested as resistance.

Broader Downside Framework

A confluence of technical factors continues to point toward a lower target zone for gold, beginning near the February spike low of $4,402. Despite very high volatility at the time, gold recognized support near the top of a long-term rising channel that had previously represented dynamic resistance. Moreover, the recent wedge breakout also pushed through potential support near the top of the channel, showing a failure of support rather than confirmation as seen in February.

The lower potential support boundary is marked by the rising 200-day moving average at $4,277, which is further reinforced by a rising trendline that connects to the August lows, as the two have recently aligned with one another. Taken together, these levels establish a broader downside framework, suggesting that while short-term rebounds may occur, the larger corrective process remains incomplete until stronger support is decisively confirmed.

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