Support Under Pressure as Weakness Builds
Downward pressure in the price of gold continued Friday, as a key support zone was further tested. A lower daily high and lower low were established with a new corrective low of $4,477, confirming downward pressure. In addition, gold is on track to end the week at its lowest weekly closing price in 10 weeks and below two key trend support indicators. This wipes out the advance that followed a trend breakout to new highs on January 12, reinforcing the shift from prior strength to current weakness that may carry into subsequent price action.
Key Breakdown Levels to Watch
If a deeper pullback occurs with this week’s low of $4,477 breaking, the higher swing low at $4,402 is at risk of failing as support. The current support confluence zone is marked by a previous resistance area at $4,550, the top line of a rising channel, a 61.8% Fibonacci retracement at $4,537, and the 100-day moving average at $4,601. A Friday close below the 100-day average would confirm a failure of support from the top channel line and that moving average, increasing the likelihood that the broader support zone gives way.
Fibonacci Levels Signal Next Downside Targets
A decisive decline below this week’s low would signal a failure of support at the 61.8% retracement zone. The 78.6% Fibonacci retracement would then become a downside target. That would also suggest that the February swing low may be broken as downside momentum accelerates. The 78.6% retracement zone is joined by the middle line of a long-term advancing trend channel, strengthening the case for a key test of support in that area. It has previously been recognized by the market as both support and resistance and may do so again, especially since the rising middle line is getting closer to touching the 78.6% price zone, which will occur around April 7.
Moving Averages Reinforce Downside Risk
The 100-day moving average has successfully acted as dynamic support for the trend since it was reclaimed in October 2023. Therefore, it represents a significant trend support zone, and a sustained break below it would likely lead to a deeper correction. If it fails as support, the 200-day moving average near $4,402 becomes a potential downside target.
It is rising towards the middle channel line and 78.6% retracement zone, adding to the developing confluence of support below current prices. The 200-day average has not been tested as support since February 2024, which was the beginning of the bullish channel, highlighting the significance of that level if reached and tying back to the broader shift from strength to potential resolution.
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