Gold (XAU/USD) Price Forecast: Reversal Signals Build Near 200-Day

Bearish Exhaustion Signals Emerging at Key Support

It is starting to look like gold may have reached a bottom for the bearish correction. On Thursday, it extended its decline to a new low of $4,366, testing a support zone anchored by the 200-day moving average. Subsequently, buyers took back control after a minor undercut of the average, which is near $4,401, leading to an intraday rally and a positive close on the day. A potentially bullish hammer candlestick pattern is set to complete with a lower daily high of $4,516.

200-Day Moving Average Defines Inflection Zone

The 200-day moving average has been a lower target since it was successfully tested as support during the sharp decline in March. That was the first test of the 200-day line since February 2024. This second test, assuming it continues to hold, further establishes long-term trend support near the 200-day average and strengthens its role as a key structural pivot for gold’s broader trend.

Bottoming Structure Faces Validation Test

After two successful tests of support near the average, gold may have hit a bottom that may lead to an eventual challenge to the current record high of $5,597. However, a drop below today’s low could change that, as it would suggest a possible extension of the decline and a failure of support near the long-term trend indicator.

Resistance Confluence at trendline and 50-Day Moving Average

Key near-term resistance is a lower swing high at $4,589. A decisive advance above that level will trigger a bullish reversal of the short-term decline. Also, the 20-day moving average would be reclaimed, as it is now at $4,589 and falling. Nonetheless, the more significant next price level is indicated by the 50-day moving average.

It was successfully tested as resistance to the prior two advances. It converged with the downtrend line today, forming a key confluence resistance zone. Therefore, a bullish trend reversal signal will trigger above that average, currently near $4,631. Since the apex of a symmetrical triangle is shown around June 11, gold may trigger an upside breakout above the 50-day average before then.

Recovery Targets Point Toward Higher-Timeframe Resistance

Following the successful reclaim of the 50-day average, gold targets a lower swing high at $4,774 and the 100-day moving average, now near $4,804. A sustained advance above the lower swing high will trigger a bullish reversal and likely continuation of the advance toward higher resistance levels not yet tested in the current corrective phase.

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