Gold prices pulled back after reaching a new record high of $2,882 during Wednesday’s session, indicating a potential reversal as the metal approaches resistance levels. The retreat suggests the market is experiencing a temporary pause, with $2,790 identified as a key support level if further weakness emerges.
Following the record high, gold’s price dropped on Thursday, suggesting the formation of a lower daily high and a lower daily low. This price action follows the completion of an extended upside target from an ABCD pattern, where the CD leg (the final phase of the move) measured 161.8% of the AB leg, in line with the golden ratio. This harmonic relationship suggests a pivot point around the $2,882 price level.
Despite the fact that the price target was $2,889, the market’s bearish reaction near $2,882 signals that this resistance zone is being tested. While the resistance was not precisely hit, the proximity of the $2,889 target and the subsequent pullback indicates a potential for consolidation or further retreat.
Consolidation or Pullback Expected
The next resistance level for gold is at $2,940, leaving a gap above the $2,889 target. However, gold may need to consolidate or experience a deeper pullback before making a push toward this higher target. Since December, gold has surged by approximately $300, or 11.6%, from a low of $2,582, marking the strongest upswing in recent months. This impressive rally suggests underlying momentum, but also raises the possibility of a temporary high.
The broader upswing, starting from November’s low of $2,537, has delivered a gain of $345, or 13.6%. This strong performance, however, also suggests that gold could be nearing a short-term peak.
Further Weakness Below $2,834
A decline below Thursday’s low of $2,834 would signal further weakness and raise the likelihood of a deeper pullback. In such a case, the breakout level and previous trend high at $2,790 would become a key support area, potentially offering a buying opportunity if the price holds. A bullish reversal at this level would signal strength and could mark the end of the correction phase.
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