Gold’s Price Weakens: Testing Key Support Levels Amid Bearish Signals

Bruce Powers
Published: Aug 8, 2023, 20:52 GMT+00:00

As gold's decline continues, attention shifts to support levels, trend indicators, and the crucial 200-Day EMA for potential signs of a bullish reversal.

Gold, FX Empire

In this article:

Gold Forecast Video for 09.08.23 by Bruce Powers

The price of gold continues to weaken with a new trend low of 1,923, which triggered a weekly bearish signal. It is also set to close below the prior trend low of 1,925. It looks like gold wants to test support of lower prices.

A graph of stock market Description automatically generated

200-Day EMA at 1,923; 6th Test as Support Since December

The next area to watch for support is around the lower uptrend line (approximately 1,921), while the 78.6% Fibonacci retracement is at 1,913. Meanwhile, the significant long-term trend indicator, the 200-Day EMA is at 1,923. This is the sixth test of the 200-Day line as support since gold rose back above the line in December after being below it from May of 2022. Gold has clearly been declining from the 100-Day EMA that was busted four days ago. Over the subsequent two days rallies were attempted but failed. Today is the follow-through day to the downside.

Not only has gold shown weakness by falling below the 100-Day EMA and dropping to a new trend low, but it is also below the long-term trendlines. The remaining lower trendline is an internal line covering a relatively short period of time. It marks a level to watch for support but the 200-Day EMA at this point should be more reliable as an indicator.

Upside Potential: Break Above 1,938, Close Above 100-Day EMA (1,941)

On the upside, if it comes before lower prices, a break above today’s high of 1,938 would be the first sign of strength. After that, a daily close above the 100-Day EMA at 1,941 would be needed. Nevertheless, the three-day high of 1,947 is close to the 100-Day line so it will provide a more reliable price level to gauge strength. That high is also this week’s high and it would put gold back above the trend lines as well.

Gold Within Rising Trend; Support Expected at 200-Day Line, Caution Below it

Despite the persistent pullback, gold remains within a rising trend. Another approach of the 200-Day line should be met with support and increasing demand. Certainly, the bulls do not want to see gold close decisively below the 200-Day line. The uptrend may be at risk of failure if that happens. Of course, price action following a drop below the 200-Day line needs to be watched carefully for signs of bearish continuation or bullish reversal.

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

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.

Did you find this article useful?