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Gold Price Forecast: Bounces Off Key Support at 50-Day Moving Average

Gold fell to a new pullback low of 2,322 where it found support and bounced. That low completed a successful test of support at the 50-Day MA (2,324), as price was rejected to the upside. Also, notice that today’s high of 2,352 provided another test of resistance just below the purple 20-Day MA on the chart. The 50-Day line is a key intermediate trend indicator.

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First Test of Support at 50-Day Line
Today was the first test of support at the line since gold broke out above it on February 29. That was the beginning of the sharp rally that peaked last week at a new record high of 2,450. It should continue to maintain support if gold is to have another shot at record highs before a deeper retracement. That means today’s low support at 2,322 is a key near-term price level for gold.

Break Above 2,364 Shows Buyers Back in Charge
Beginning on Friday’s trading session, gold will show strength on a rally above today’s high of 2,352. But an advance above the minor swing high at 2,364 will give a clearer sign of strength as that will also put gold back above the purple 20-Day MA, currently at 2,355. However, to clear the pullback bottom and set the stage for a test of the recent record high, the price of gold should get above last Thursday’s high of 2,384. Interestingly, notice that two trendlines cross just around that price zone.

Weekly Chart is Clearer
Nevertheless, when looking at the weekly chart the picture is a little clearer. There is one more day of trading for the week and unless gold shows greater strength before the week’s close it is set to end with a relatively narrow range week with a high of 2,364 and a low of 2,322. Narrow price ranges typically end with an acceleration of momentum in one direction or another once a breakout triggers. On a weekly timeframe, it is representative of consolidation.

There was only one other weekly narrow range since the breakout of a symmetrical triangle began the recent sharp rise on February 29. It occurred on March 11 and was followed by a resumption of the bull trend. However, there was a quick drop below the week’s low before buyers took back control.

Source: Bruce Powers Fxempire