Gold Price Forecast: Hits $3,005 Before Reversing, Key Levels to Watch

Gold rallied to a new record high of $3,005 before encountering resistance and reversing intraday. The high achieved a previously identified target at the 127.2% extension of a rising ABCD pattern. It shows a harmonic relationship between the two upswings of the pattern. This is a good example of why these types of relationships are tracked.

Subsequently, gold it set to end the day with a bearish shooting star candlestick pattern. At the time of this writing, trading continues near the lows of the day, which is currently $2,978. However, given the strong bullish breakout to new record highs this week, caution is warranted as a bearish pullback would be counter to the prevailing strong uptrend on multiple time frames.

Short-term Bearish Signal Below $2,978

A pullback to test previous resistance levels as support will be indicated with a drop below today’s low. The price zone around the prior high at $2,956 is the first price level to watch for support. Further down is the recent swing high and a weekly high at $2,930. It may soon be joined by the 20-Day MA, currently at $2,921, as it is rising and should soon converge with the $2,930 price area or rise above it.

Weekly Bullish Signal Confirmed

In addition to a breakout to new record highs this week, gold broke out of an inside week continuation pattern on a rally above last week’s high of $2,930. The subsequent bullish performance showed strong demand and bullish momentum. A bearish pullback after reaching a target zone is normal and healthy for the trend as gains are digested.

It should lead to a bullish setup following a test of support. Despite the potential support levels mentioned above, there is a possibility that gold falls as far as the nearby trendline before the retracement is completed as it marks a lower trend support area for the advance that began from the December lows.

First Higher Target at $3,012

Regardless of the potential short-term bearish indications, a decisive breakout above Friday’s high of $3,005 shows continued strength and the possibility that higher prices can be reached before a pullback. There are five potential higher targets from $3,012 to $3,043. It is hard to say which one might be the more significant price level, but the price target derived from the longest pattern is $3,033.

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