Gold (XAUUSD) Price Forecast: Bullish Outlook Improves as Breakout Confirms

Gold took a rest on Tuesday as it pulled back to test support at a top trendline that previously marked dynamic resistance of the recent bearish correction. A slightly new trend high of $3,392 was reached earlier in the session before sellers took back control and took gold to a low of $3,333 for the day. Support for the day was seen at the confluence of a top trendline and the 38.2% Fibonacci retracement of the current internal upswing.

Therefore, although it is set to decline for the day the larger developing pattern has turned decidedly more bullish given Monday’s price action. A relatively narrow range day will be established today in a relatively bullish position, above the trendline and in the top half of Monday’s trading range.

Valid Signs of Strength

A bull breakout of that trendline triggered on Monday and led to a rise above a lower swing high at $3,366. The breakout was confirmed by a daily close above the swing high. This is a relatively early bullish signal for the continuation of the long-term rising trend. A weekly closing price above $3,366 will confirm the breakout on a weekly basis. The highest weekly closing price in gold historically is $3,357 from two weeks ago.

Rising ABCD Pattern Points to $3,491

The rise above the $3,366 swing high triggered a continuation of a rising ABCD pattern and increases the chance that the initial target from that pattern at $3,491 may be reached. Notice that the target is aligned with the record high of $3,500 from April. But gold first needs to get above another lower swing high at $3,439 first.

That is the next potential resistance area and a prior weekly high. If gold can eventually sustain a breakout above the trend high of $3,500, higher potential targets could be reached. There are several higher price areas to watch, including $3,357, $3,603, $3,642, and $3,663. The higher price level is marked by two pattern price levels and therefore it may have greater significance. Earlier upside targets are generated from relatively recent patterns, since the swing low in April. Long term targets for gold are up around $3,790 and $3,893.

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