Gold (XAU/USD) Price Forecast: Stalls at $3,897 as Buyers Test Key Levels

Gold Holds Resistance While Confirming Support

Gold held firm at resistance on Thursday as it printed a slightly higher high of $3,897 before fading back. A lower daily low of $3,819 was established, essentially confirming a successful test of support at the prior rising channel top, which had previously acted as resistance. Once a former resistance level is reclaimed as support, it reflects the underlying strength of the trend. What happens next, however, may determine whether gold extends higher immediately or pauses for consolidation.

Dynamic Support Levels in Focus

A pullback to the 10-Day moving average at $3,784 would represent a normal retracement under current volatility conditions. The 10-Day line has consistently marked dynamic support throughout the latest rally and remains the first key level to watch. A clear break below the 10-Day would indicate a shift in near-term momentum, opening the way to the next support level at the 20-Day average, now at $3,714. Both moving averages highlight the importance of monitoring how much demand persists during any dip.

Demand Still Outweighs Supply

The ongoing rally, which began after the August swing low, has been supported by strong bullish momentum. Each brief pullback has been shallow, with no more than two consecutive sessions of lower highs and lows. This behavior highlights the persistent demand underpinning the uptrend. Still, the more extended the move becomes, the greater the likelihood that a deeper corrective phase may be required to reset conditions before advancing further.

ABCD Projection Signals Key Resistance

The new all-time high of $3,897 coincides almost perfectly with the 261.8% projection of a large rising ABCD pattern that originated from the 2018 lows. The precise reaction at this level suggests that market participants are closely attuned to it. A decisive breakout above $3,897 would clear the way for continuation toward the next resistance zone, projected from $3,969 to $4,000, which also aligns with the upper boundary of a long-term rising channel.

Momentum Risks and Long-Term Context

While buyers remain firmly in control, gold is showing signs of becoming stretched. The monthly relative strength index (RSI) is now the most overbought since January 1980, when gold reached a generational peak. This doesn’t preclude further gains, but it does serve as a cautionary reminder that momentum-driven advances can be vulnerable to sharp corrections once exhaustion sets in.

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