Gold Price Forecast: Retreats After Hitting $2,882 Record High

Following a new record high of $2,882 hit during Wednesday session, gold pulled back on Thursday and will likely leave a lower daily high and lower daily low for the day. Yesterday’s high follows the completion of an extended upside target from a rising ABCD pattern where the CD leg of the advance was 161.8% (golden ratio) of the first leg up, labeled AB.

Therefore, the advance in the price of gold during the second leg up has a harmonic relationship with the price change seen in the first leg. Once that happens, a potential pivot level has been identified. Given the subsequent bearish reaction following the $2, 882, it looks like the market recognized the area around the price target. Although it was not a direct hit, as the target was at $2,889, it was close enough given the bearish reaction.

Consolidation or Pullback May be Next

Moreover, the next potential resistance level on the chart is $2,940. That leaves a bit of a gap above the $2,889 price level to the next target. Gold will be in a better position to fill that gap and make a run for the next higher target price once there is a rest of some degree, either taking the form of a deeper pullback or consolidation. Gold has had a strong run rising as much as $300 or 11.6% since completing a swing low at $2,582 (C) in December.

On a relative performance basis, that is the strongest upswing of the prior eight and reflects strong underlying momentum. But it also indicates that at least a temporary high may have been reached, for now. The full upswing, beginning from the November swing low at $2,537 (A), had a gain of as much as $345 or 13.6%.

Further Weakness Indicated Below $2,834

A drop below today’s low of $2,834 will signal further weakness and increase the chance for a deeper pullback. The recent breakout level and prior trend high at 2,790 becomes a potential support area and has a good chance of being tested, at a minimum if a pullback deepens. If support is tested around that price level and it is followed by a bullish reversal, that will be a sign of strength and could end the correction, if it comes.

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