Gold (XAU/USD) Price Forecast: Record High Breakout Signals Continued Strength

Record High Test Shows Ongoing Strength

Gold struck a new record high of $4,635 for a brief period on Tuesday before sellers stalled the advance. A narrow range day with a low of $4,573 at time of writing, shows the supply/demand balance to be relatively equal for the day. Trading has remained in the upper third of Monday’s range, however, which shows strength. Also, a new daily closing high could end the day if it is above Monday’s high of $4,630.

Pullback Completion Reinforces Bull Trend

Continued signs of strength in the price of gold are anticipated given the long-term breakout that triggered in December. Monday’s high further confirmed the completion of the first pullback that ended near the 38.2% Fibonacci retracement and 20-day average. Of significance, the pullback was not too far below the prior $4,381 peak as well.

That relationship and bullish reversal signs following the 38.2% retracement are indications of underlying strength of the trend and suggest further upside. Nonetheless, current price areas to watch for support on a pullback are at the prior high of $4,550, a recent interim swing high of $4,500, and the 10-day moving average, now at $4,556 and rising.

Resistance Range Defines Near-Term Upside

A breakout above Tuesday’s high of $4,635 triggers a potential bullish continuation of the trend. However, the next potential resistance zone starts only a little higher at $4,664 and up to $4,713. It remains to be seen if the market responds to either of those long-term targets for gold, or a 161.8% Fibonacci extension of the October correction at $4,687, which is between the two.

Given the closeness of the targets, the range can be considered more so than individual price targets. The suggestion is to expect resistance once hitting $4,664 and up to the top of the range. And a decisive breakout above $4,713 indicates a breakout of a range and therefore a sign of strength.

Weekly Breakout Confirms Strong Demand

Bullish implications on the weekly chart further show strong demand for the uptrend. Dynamic support held during a pullback above the 10-week average and an inside week breakout triggered on Monday. On a weekly basis, the new high breakout will confirm on a close above the prior high at $4,550.

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