Gold’s Battle: Resilience Above Key Levels Amidst Market Uncertainty

Gold Forecast Video for 19.01.24 by Bruce Powers

Minor signs of strength return to gold on Thursday as it rose above yesterday’s 2,002 low and advanced back above both the uptrend line and 50-Day MA, but just barely. The 50-Day MA, which is a key trend indicator for gold, is at 2,018. It can be used as a proxy for the uptrend line as they have converged together.

It is useful currently as the line was successfully tested as support three times more recently starting with the November swing low. A quick recovery of the 50-Day line is bullish if it can be sustained and leads to rising prices. However, a drop below yesterday’s low puts gold at risk of a deeper and longer correction.

Minor Strength Seen Following Yesterday’s Decline

Yesterday, gold triggered a bearish trend continuation signal on a decline below the 50-Day line and uptrend line. That pivot takes on greater significance since the two indicators identify a similar price. A quick recovery from yesterday’s bearish breakdown will negate the implications if we see prices subsequently rising away from the lines. A daily close above the 50-Day line is needed first though for a slightly bullish sign. Then, upside follow through is key.

Rally Above 2,033 Shows Strength

Additional strength is subsequently indicated on a rally above yesterday’s high of 2,033. Once a daily close occurs above that price level gold should be ready to proceed higher. The swing high at 2,062 (C) becomes the next significant price level to exceed.

Further Weakening Increases Chance of Testing 200-Day MA at 1,963

If instead of strengthening, gold triggers a bearish continuation on a drop below yesterday’s low, it first heads towards the 2,987-price zone, which is targeted by a falling ABCD pattern. The key 200-Day MA is lower at 1,963, and strengthened by the fact that an extended falling ABCD pattern completes nearby at 1,967. Nevertheless, a drop to the 200-Day line will alter the structure of the rising trend and may lead to gold taking longer to head back towards record highs. Since the next sustained rally may lead to new highs for gold, a dump to further flush out weak holders first may be part of the plan.

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