Gold’s Downward Spiral Continues: Is the Pullback Almost Over?

Gold Forecast Video for 29.05.23 by Bruce Powers

Downward pressure on gold continues with the precious metal dropping briefly to a new trend low before hitting support at 1,937, the low of the day. Support was found around the long-term uptrend line rising from the November swing low and the 100-Day EMA, now at 1,934. The 100-Day line is going to be key right now since it has lined up with the uptrend line and it identifies a specific price whereas the trendline price is estimated.

Is the Pullback Over?

Yesterday, Thursday, gold completed a 50% retracement at 1,944 and an ABCD pattern that was extended by 127.2% at 1,943. It subsequently closed just below that price zone, below the uptrend line, but above the 100-Day line. These are somewhat bearish signs and indicate that downward pressure remains. So, gold could fall further. The next lower target level below the 100-Day EMA is the 61.8% Fibonacci retracement at 1,912. That potential support area is also indicated by the completion of an ABCD pattern extended by 161.8% at 1,915. Extended ABCD patterns means that the CD leg of the decline is extended relative to the AB leg by the Fibonacci ratio mentioned.

If the 61.8% retracement is reached, it would put gold clearly below its long-term uptrend line. Moreover, the drop below the 100-Day EMA at that point exceeds the two dips below the 100-Day EMA from February and March. Hitting the 61.8% retracement would put gold approximately 1.15% below the 100-Day line while March and February drops were a maximum of .85% below the line. If a quick recovery follows, it won’t matter much. Otherwise, this price behavior relative to the 100-Day EMA would be weaker as gold fell further below the line.

Developing Expanding Triangle

The month of May generates an outside candle as natural gas initially rose above April’s high and then fell below April’s low. On a shorter time that pattern is an expanding triangle, where the two trendlines on the boundary of the pattern are headed away from each other. The lower line is shown on the chart, and you can see how it will converge with the 61.8% Fibonacci zone by next Friday. This would be another indicator supporting a maximum correction to the 61.8% Fibonacci zone.

For a look at all of today’s economic events, check out our economic calendar.