Gold Shows Early Signs of Recovery
After a sharp 10.8% correction from its April record high of $3,500, gold prices are showing early signs of a potential bullish reversal. The recent low of $3,121 marked a significant bottom, supported by technical indicators that suggest strengthening demand.
On May 16, gold posted a higher daily high of $3,252 and a higher low of $3,154, signaling possible recovery momentum. However, the daily close remained below the intraday high, indicating that confirmation of this bullish reversal is still pending.
Technical Support Near the 50-Day Moving Average
The $3,121 low coincides with key support zones, including the bottom of a rising trend channel and the 50-Day Moving Average (currently near $3,162). A descending ABCD pattern also reached its 100% target near $3,140, reinforcing the strength of this support area.
These overlapping technical indicators point to a strong base for gold, suggesting the longer-term uptrend remains intact unless bearish reversal signals emerge.
What Comes Next for Gold?
For gold to confirm a sustained rally, it needs to break above the recent high of $3,252 and reclaim the 20-Day Moving Average resistance at $3,302. Successfully doing so could set the stage for a move toward the top declining trendline of the broader falling channel formed during the correction.
Bearish Risk if Support Breaks
Traders should watch closely for any drop below this week’s low of $3,121. A sustained fall beneath this level could signal a breakdown in the near-term bullish trend and possibly lead to further downside or extended consolidation within the falling channel.
Summary
Gold is currently at a critical juncture, with bullish reversal patterns emerging near strong technical support levels. While confirmation is still needed, the signs suggest that the gold price correction may be nearing its end, and a recovery could be underway—provided resistance levels are overcome.
Further Reading
- Gold Technical Analysis – Investing.com
- Gold Price Quotes & Charts – Bloomberg
- Gold Futures Market – CME Group
- Understanding the ABCD Pattern in Trading – Investing.com