Gold prices surged to a 16-day high on Wednesday before slipping lower, failing to confirm a breakout above key resistance. Despite the pullback, the technical structure still supports a bullish scenario as gold consolidates within a continuation pattern.
Key Highlights:
- Gold (XAU/USD) rallied to a multi-week high of $3,375 before reversing.
- The breakout attempt lost steam, keeping prices inside a consolidation pattern.
- Support at $3,320 held for a second straight session, reinforcing short-term bullish bias.
- Long-term structure remains bullish unless a drop below $3,283 occurs.
Failed Breakout, But Bullish Setup Holds
Gold prices attempted to extend their recent uptrend on Wednesday, briefly breaching the $3,375 level—marking the highest point in over two weeks. This move initially suggested a continuation of the upward momentum that began from the recent swing low near $3,247.
However, the rally failed to hold. By the end of the U.S. session, gold pulled back sharply, closing near the lower end of the daily range. This indicates the breakout was not confirmed, and a sustained move above $3,375 is now needed to signal renewed upside momentum.
Support Zones Reinforce Bullish Potential
Despite the setback, bulls remain in control as gold consolidates within a bullish pennant formation. The 50-day moving average near $3,320 has provided a solid support base for the second consecutive day. This area also aligns with a short-term descending trendline, giving it added technical importance.
If gold can maintain this support, it may set the stage for another upside test in the coming sessions. A drop below $3,283 would be the first sign of weakening bullish momentum, while a breakdown beneath the lower boundary of the pennant would shift the outlook to bearish.
Low Volatility Signals a Big Move Ahead
Gold has been trading within a narrowing range, signaling reduced volatility. This typically precedes a strong directional move. A breakout from the current pennant pattern could trigger rapid price movement, depending on market sentiment and macroeconomic catalysts.
Notably, the monthly chart (not shown here) reflects several “inside months”—where recent price action stays within the prior month’s range. This kind of consolidation often precedes sharp breakouts. A clear move above $3,451 would confirm a bullish breakout with further upside potential.
Technical Levels to Watch
| Support | Resistance |
|---|---|
| $3,320 (50-day MA) | $3,375 (swing high) |
| $3,283 (trend pivot) | $3,451 (major breakout level) |
Bottom Line
Gold’s recent rally faced resistance near $3,375, but the broader uptrend remains intact as long as key support levels hold. Traders should watch for a confirmed breakout above $3,375 or a deeper retest of support around $3,283. Continued consolidation within the pennant points to an upcoming breakout that could bring renewed volatility and opportunity.
Stay Updated with Daily Forex Pakistan.