Gold Price Forecast: Analyzing Resistance at 2,529 Amid Consolidation

Gold Price Tests Resistance Level

Once again, gold tests recent highs for resistance on Wednesday, rejected from the day’s high of 2,529. That level is close to the record high reached three weeks ago at 2,532. For the fourth week in a row, gold has attempted to break above the high and sustain its bullish trend.

Resistance was observed at this high leading to a likely close for the day in the red, notably in the lower half of the day’s trading range. Support was detected at 2,501, while the 20-Day MA at 2,505 indicates ongoing short-term trend support.

Ascending Triangle Formation

There seems to be two ways to analyze the current tight consolidation pattern; it can be seen as a rectangle or as an ascending triangle developing within. Should the triangle play out, there could be a sharp upside breakout above 2,532. The integrity of this triangle will be crucial over the next five days as the two boundary lines will intersect.

A breakout or failure will likely occur during this timeframe. Should the small uptrend line at the bottom of the ascending triangle fail to hold as support, we might see another test at the 50-Day MA sitting at 2,449.

Managing Risk in the Upside Bias

While the bias shifts towards the upside due to an existing uptrend across multiple time frames, prolonged consolidation raises the risk of failing to maintain upward movement. The significance of the 50-Day line cannot be overstated, as it formerly confirmed support during declines.

Recently, gold bounced off this line in July and August, emphasizing its critical role. A breakdown from here would serve as a warning sign for traders.

Contraction Leads to Potential Expansion

The current contraction in the price range hints at the possibility of a significant breakout. The high range is marked at 2,532, and the low at 2,471. A decisive rally above 2,532 could drive gold toward 2,566, the 161.8% extended target of a measured move stemming from the 2022 lows.