Gold’s Critical Juncture: Bullish Breakout or Bearish Retreat Ahead?

Bruce Powers

As gold holds above 2,010, the market teeters on the edge. A breakout above 2,036 could signal renewed strength, while a decline may indicate a deeper correction ahead.

Gold bullion, FX Empire

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Gold Forecast Video for 07.12.23 by Bruce Powers

Gold trades inside day on Wednesday, as it holds above Tuesday’s low and the retracement low at 2,010. That low completed a 61.8% Fibonacci retracement, and it matches a prior key swing high. Two indicators identifying the same price area and the subsequent rejection of price indicate that a retracement low may be in. If so, then a rise above today’s high of 2,036 will trigger a bullish inside day breakout. Whether gold continues higher from there or bounces and then turns back down, remains to be seen. First, an upside breakout is needed as a sign of strength.

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Inside Day Breakout Will First Target 2,0152

Upon a bullish signal gold heads up into the wide price range from Monday. It provides a wide area that gold may trade within before triggering a trend continuation signal above 2,135. Price levels to be aware of on the way up include a previous minor swing high at 2,052. There is then a weekly high at 2,075, which matches the prior record high of 2,070 from March 2022. A little higher is the prior record swing high of 2,082.

Downside Trigger Points to Retest of Lows

On the downside, a breakout below today’s low of 2,017 signals a likely retest of the 2,010-price area and increases the chance for a drop below that price level. Gold came down hard off the 2,135 high on Monday and generated a very wide range day reflecting a spike in volatility. It wouldn’t be surprising to see it take more time for a correction, either testing lower prices as support or consolidating. Note that the low on each of the past two days sits right on support of the internal uptrend line. Therefore, a decisive decline below today’s low will also put gold below the uptrend line, a sign of weakening.

Nevertheless, a drop below this week’s low is needed to signal a continuation of the retracement. If this scenario occurs, then watch for potential support around the 21-Day MA at 1,996 followed by a prior swing high at 1,987. A little lower will complete the 78.6% Fibonacci retracement at 1,975.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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