Gold (XAU/USD) Price Forecast: Support Provided at 20-Day Average

Chart Action

Gold extended its bearish correction on Wednesday, dropping to a new low of $4,003 before buyers sparked an intraday bounce. The 20-day moving average provided support, while the 10-day average at $4,154 flipped to resistance, capping the day’s high at $4,161. Trading now in the upper half of the range positions gold for a potential bull hammer candlestick, signaling a pause in selling pressure.

Trade Setup

A rally above $4,161 would activate the hammer breakout, reclaim the 10-day average, and target prices inside Tuesday’s wide selloff range. The $378 (8.6%) decline from Monday’s $4,381 record high suggests gold may need time to consolidate before resuming its climb. Tuesday’s volatility warns that bounces into that range could hit resistance, prompting another dip.

Support Levels

Holding the 20-day average at $4,001 is bullish, but it doesn’t guarantee an immediate return to the prior steady ascent. A decisive close below this line would shift focus to the 38.2% Fibonacci retracement at $3,973, near a prior support shelf, where a quick recovery could emerge given its proximity to today’s low.

Channel Dynamics

The correction tests the top line of a short-term rising trend channel, triggered by an October 13 breakout from February’s lows. Today’s brief dip below this line, followed by a likely close above it, supports a successful test of the former resistance as new support. This reinforces the bullish dynamic of the initial channel breakout, provided prices hold firm.

Outlook

The $4,001 support holds the key—closing above $4,161 fuels a hammer-driven rebound, while sub-$4,001 eyes $3,973. Tuesday’s range looms as resistance, but a sustained channel hold keeps bulls in play. Watch today’s close for confirmation: strength signals consolidation, weakness hints at deeper tests. Gold’s long-term uptrend persists, but this pause needs digestion before the next surge.

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