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Gold Record Highs, but Is a Pullback Coming?
By: Bruce Powers | March 8, 2024

• Gold marks eighth consecutive day of price increases, showing strong upward momentum but signaling a possible temporary top and pullback.

Today, Friday, marks the eighth consecutive day in a row that the price of gold has progressed higher. On each of those days there has been a daily close above the high of the prior day. That is one sign of strong upward momentum. The uptrend has been clear, and it continued today with gold reaching a high of 2,195 before backing off. However, trends retrace and given initial signs of resistance today, at least a temporary top may have been reached leading to a pullback.



Key Target Reached

The 2,195-price zone (1,189 – 2,194) was highlighted in prior articles recently as a primary initial target for gold. It was identified from the two impulse rallies starting from the early-October swing low (A). A 10.5% advance of the rally from the recent swing low from mid-February completed at 2,194. In addition, an initial target derived from measuring the symmetrical triangle marked on the chart was at 2,189. Finally, you can see almost an exact hit with the 1.414% Fibonacci extension of the retracement from the decline following the May 4, 2023, swing high.

Long-Term Bullish Strength Signaled

Strength of the long-term breakout will confirm this week as gold is on track to close well above the prior record high of 2,135 from December. The breakout is very bullish as it occurred from a multi-year basing period for gold. Moreover, there have been three prior new record high breakouts starting from 2022 where the new high week closed above the prior record high. That will be the case this week and highlights strong upward momentum.

Risk of Retracement Increases

Nevertheless, as alluded to above, gold has reached a target and is extended. A correction of some degree could begin soon. The next sign of weakness that could lead to a deeper retracement occurs on a drop below today’s low of 2,154. Subsequently, a test of support near the prior high of 2,135 would not be surprising. The 38.2% Fibonacci retracement level is at 2,115, which is very close to the 8-Day MA at 2,111. A more significant potential support level looks to be down around 2,088. Regardless, gold’s bullish breakout is not a secret and will likely continue to support improving demand in the previous metal.

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