Gold (XAU/USD) Price Forecast: Reversal Opens Path Toward $4,494

Trendline Reclaim Faces an Immediate Test

Gold extended gains on Thursday, reaching a new high of $4,304 for the advance, after reclaiming a rising trendline earlier in the session. At the time of writing, it appears that the trendline has been recognized as resistance by the market, since gold has pulled back below it. That put gold in the lower half of the day’s trading range as well, a sign of short-term weakness.

Nonetheless, if gold can close above Wednesday’s high of $4,268, the trendline recovery would be confirmed. Otherwise, it may continue to show signs of resistance that could lead to the first pullback following a significant upside breakout.

Bullish Structure Opens the Door Higher

On Wednesday, gold signaled a bullish reversal of the prior decline with a rally above and a daily close above the lower swing high of $4,203 from early July. An initial potential support level is indicated by that high, followed by a more recent swing high of $4,166 and the 50-day moving average at $4,156 and falling. The bullish reversal signal of a change in market structure was supported by the reclaim of the 50-day moving average, which had represented dynamic resistance since mid-March.

If the uptrend line can be recovered, then gold is cleared to advance toward an initial target zone near the October peak of $4,382 and the 100-day moving average, currently around $4,394 and falling. The higher 200-day moving average provides the next target zone above there at $4,494. Since there has not yet been a larger pullback to test the 200-day moving average as resistance, signs of resistance are expected on the first approach to that average.

$4,065 Line in the Sand

The developing bullish scenario remains dominant unless there is a decisive failure of support near Wednesday’s low of $4,065, which corresponds to the 20-day moving average at $4,074. Nonetheless, a sustained reclaim of the 200-day moving average would be needed before gold showed signs that the long-term bull trend may be ready to reassert itself. For now, Wednesday’s bullish reversal favors a continued advance toward the initial targets, but the ability to reclaim and hold the rising trendline remains an important near-term test.

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