Upside Targets Frame Next Resistance Zone

Going forward, a bullish continuation of the trend will be triggered on a new high and confirmed with a closing price above $4,643. That would put gold in a position to challenge potential resistance at the next upside targets at $4,664, $4,687, and $4,713. The middle target is the 161.8% Fibonacci extension of October bearish correction. Therefore, the target is derived from a short-term measurement. On the other hand, the two other price targets are from a long-term pattern. Specifically, a 350% extension and 423.6% extension of the decline that began from the 2011 peak of $1,921, respectively.

Longer-Term Projections Extend Bullish Outlook

It remains to be seen if there are signs resistance near either of those price targets but the more recent pattern target of $4,687 might have a good chance of being challenged. Above that next price zone is a $4,766 target, which is the 361.8% projection for a long-term rising ABCD pattern or measured move. It connects the 2018 swing low at $1,160 (A) and 2022 low at $1,615.

Support Levels Reinforce Bullish Trend Structure

On the downside, there are several significant potential support levels for a pullback. Short-term is the recent high of $4,550 and the rising 10-day average at $4,514. A minor swing high is at $4,500 and the 20-day average is at $4,554. Overall, the bulls remain in charge as long as gold stays above the 20-day average on a daily closing basis. Signs of strength suggest that a pullback would likely be shallow and relatively short, if it occurs before new highs.

Signs of Underlying Strength

The recent pullback in October found support near the 38.2% Fibonacci retracement. That is a relatively minor retracement, reflecting strong underlying demand. In addition, a second breakout from a rising trend channel triggered in December and the top of the channel was recently confirmed as support in a similar price area as the 20-day average. That confirms a change in character for the trend. It is gaining strength.

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