Gold Price Forecast: Is a Correction on the Horizon?
Gold prices remain near their recent highs, but technical indicators suggest a potential bearish reversal. If gold drops below $2,891, it could signal a deeper pullback, with the next major support zone lying between $2,810 and $2,813.
Gold Price Consolidates Near Highs
Gold has maintained its strength throughout the week, consolidating near its recent peak. On Tuesday, the precious metal surged to a new short-term high of $2,930, following a strong bullish reversal from support at $2,833, recorded last Friday. Additionally, gold has consistently closed above the 20-day moving average (MA) at $2,909, reinforcing its current bullish trend.
At present, gold is trading in the upper half of its daily range, and unless it surpasses $2,930 before the session ends, a lower daily high and low will be recorded. This could indicate potential weakness in the trend.
Technical Indicators Suggest a Bearish Pullback
Gold recently completed a 78.6% Fibonacci retracement, which was followed by a one-day bearish reversal signal. This increases the likelihood of further downside movement before the correction is complete. So far, only one downward leg has materialized, bottoming at $2,833. Despite gold initially breaking below its 20-day MA last Thursday, it had already lost support at a key uptrend line.
During the current rally, the 20-day MA failed as resistance, but the previous trendline is now acting as a resistance zone. If gold manages to break above this week’s high, this trendline will be a crucial level to monitor.
Gold Price Target: Will $2,810-$2,813 Hold as Support?
A continuation of the bearish reversal pattern will be confirmed if gold falls below $2,891, which could trigger further selling pressure. This would likely lead to a retest of the next major support zone at $2,813, which aligns with the 38.2% Fibonacci retracement level and the initial target of an ABCD (zig-zag) pattern around $2,810.
With multiple indicators pointing to this range, it is likely to act as strong support. If a correction deepens following this pullback, gold could regain momentum and resume its bullish trend, setting the stage for another attempt at new highs.
Key Takeaways:
- Gold is consolidating near $2,930, but faces potential downside risk.
- A break below $2,891 could trigger further losses, targeting $2,810-$2,813.
- 38.2% Fibonacci retracement and ABCD pattern projection suggest strong support in this range.
- If gold holds at this level, it may resume its bullish trend.
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