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Thursday, May 09, 2024 4:46:52 PM
By: Bruce Powers | May 9, 2024
• A breakout above key resistance levels, including 2,347 and this week's high, could signal a sustained advance for gold, following its multi-year basing pattern breakout in March.
Gold showed strength today, rising to test resistance around the 20-Day MA with the day’s high of 2,342, at the time of this writing. That is an eight-day high for which it traded within a relatively tight range. Today’s high generates a new high for the consolidation range. Although it is a sign of short-term strength, it doesn’t change the near-term outlook. A daily close above the 20-Day MA at 2,335 would begin to do that. Also, after today’s session, a daily close above today’s high would also be a sign of strength that may lead to increased demand.
![](http://responsive.fxempire.com/v7/_fxempire_/2024/05/a-graph-of-stock-market-description-automatically-53.png?func=crop&q=70)
Testing Resistance
So, what happens next will be of interest. If gold moves above today’s high (also 20-Day MA), then higher prices may follow. But if today’s resistance holds and is followed by a pullback, a continuation of the retracement remains in play. Last week’s high of 2,347 is also an important near-term price level as a rally above it will trigger a bullish reversal in the weekly time frame. Currently, gold is set to complete this week as an inside week.
Therefore, starting next week a breakout above this week’s high would provide a bullish signal, keeping in mind that such a move would also exceed resistance around the 20-Day line. Buyers have regained control of silver following today’s rally above its 20-Day MA. This might be a warning that gold could be about to do the same. Price action will provide a guide.
Watching for Signs of Strength
Potential lower targets have been discussed in recent articles, so today let’s consider the upside potential. A decisive breakout above last week’s high of 2,347 will provide a bullish signal that could lead to higher prices, or above this week’s high once the week completes. Additional strength will be indicated on a rally above the most recent swing high on the daily chart at 2,352 (C). Once there is a daily close above the slightly higher level, the chance for a sustained advance improves.
Minor Retracement Shows Underlying Strength
When considering the larger picture. Gold broke out of a multi-year basing pattern in March and kept going until reaching the current record high of 2,431. If last week’s low of 2,277 is the completion of a retracement, it would reflect strong underlying demand for gold as buyers stepped up before a 38.2% Fibonacci retracement completed.
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Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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