The runaway advance in gold headed to a new record high of 2,431 before resistance kicked in and turned the trend back down on an intraday basis. It looks like today could be the top for now. Today’s high exceeded the top of a Fibonacci confluence zone with a high of 2,422.

Support was subsequently seen near the 8-Day MA with a low of 2,334, at the time of this writing. In addition to the higher Fibonacci levels being reached a large ABCD pattern completed during today’s advance at 2,386.

Weak Close is Likely Clue for a Deeper Retracement

Gold is set to close weak, not only on the daily chart, but also on a weekly basis. Unless there is a rally prior to today’s close, gold will end the week with a bearish shooting star candlestick pattern. A weekly bearish signal will subsequently be given on a drop below this week’s low of 2,303. If hit, the short-term 8-Day MA will have already been broken.

Initial Retracement Levels

If a bearish retracement does trigger support might first be seen around the 38.2% Fibonacci retracement at 2,282. Also, the 50% retracement is at 2,256. However, since gold would be coming off a very aggressive rally, having risen as much as 22.5% from the February swing low of 1,984, a rapid recovery from a retracement may not come quickly.

Notice that the relative strength index (RSI) momentum oscillator has formed a double top and is fast turning back down from overbought conditions. The RSI has been the most overbought recently since the 2020 swing high.

Correction Could See Test of 20-Day MA

When considering the moving averages, a decline to test support around the 20-Day MA would not be surprising once the 8-Day line fails. It is currently at 2,249. Gold rose away from the 20-Day line prior to the symmetrical triangle breakout on February 29. Since then, there has not been a test of support at the line.

That means that once it is approached again, there is a good chance it will be tested. Today’s price action does not change the long-term bullish outlook for gold given its recent breakout from a multi-year basing pattern. As with all assets, profit taking eventually takes hold, weakening short-term demand and leading to a retracement.