SPDR Gold Trust (GLD)

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Gold Faces Bearish Retracement, Testing Key Support Levels
By: Bruce Powers | July 19, 2024

• Gold continues bearish retracement, testing key support at 2,389 with potential further decline to 61.8% retracement at 2,366.

Gold continued its bearish retracement on Friday, falling to a low of 2,394 before finding minor support. It is well on its way to test support around the 50% retracement at 2,389. Notice that the 2,389-price area was where resistance was encountered at a minor swing high in early-June. It also stalled the recent ascent for several days in early-July before gold ran up to a new record high of 2,484 on Monday.



Downward Momentum Accelerates

Given the acceleration in the pullback from the new record high gold may continue to fall and test lower potential support levels if the 50% retracement area doesn’t hold. Lower down is the convergence of several indicators that have converged around the 61.8% Fibonacci retracement level at 2,366.

Both the 20-Day MA (purple) and 50-Day MA (orange) are near the 61.8% retracement zone. Currently, the 20-Day line is marking potential support at 2,374 and the 50-Day line is at 2,358. There is also an internal uptrend line close by that should be watched as well.

New High Breakout Fails to Hold

A pullback following a new record high is not that surprising given that the rally that preceded the breakout began down around 2,294 in late-June. By the time gold broke out to a new record high it was further into the trend and bullish momentum could not be sustained. Now that the upside follow through has ended downward pressure in the price of gold has increased. The reversal from this week’s high sets up a bearish weekly candlestick pattern.

Weekly Bearish Shooting Star on Deck

On the weekly chart gold is about to end with a bearish shooting star candlestick pattern. It shows buyers in charge earlier in the week but by the end of the week, sellers were in charge. In other words, a failed breakout occurred, and sentiment has turned short-term bearish. Therefore, it may not be resolved quickly, and gold may need some time before it is ready to attempt a new record high again.

A decline below this week’s low of 2,394 will trigger a weekly bearish reversal. This is another reason why the lower price zone target is at greater risk of being reached. Nonetheless, the two prior corrections on a weekly basis lasted either two or three weeks.

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