Gold Forecast 18/12: Testing The Same Level (Chart)

(MENAFN- Daily Forex)

• Gold markets rallied toward major resistance near $4,400 as traders weigh upcoming central bank decisions.
• The broader trend remains bullish, with strong support levels intact and higher prices favored over the coming months.

Gold markets rallied again during the trading session on Wednesday as we continue to threaten the $4,400 level. All things being equal, the $4,400 level, of course, is something that you need to pay close attention to as it has been an area of extreme resistance. It was a major swing high previously. And with that being the case, I think you have to look at this as a market that is trying to figure out whether or not the central bank meetings over the next couple of days, with the European Central Bank, the Bank of England, and the Bank of Japan all giving an interest rate decision, whether that really moves things. After all, central bank intentions have a major influence on gold.

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With this being said, I would also pay close attention to the fact that the central banks around the world continue to hoard gold. And I think it's probably only a matter of time before we break higher. We are at the top of an uptrending channel, getting ready to break above it. But you could make an argument that we are also in the midst of a pretty significant ascending triangle, depending on how you plot your lines.

EURUSD Chart by TradingViewKey Support and Resistance Levels

So, it all ties together for higher prices. Short-term pullbacks end up being buying opportunities as far as I can tell, with the $4,200 level offering massive support. Right along with the 50-day EMA and the uptrend line of the uptrending channel, right now reaching about $4,150. I don't have any interest in shorting gold, but if we were to break down below the $3,950 level, then you could see gold drop pretty significantly.

In that environment, I would anticipate that gold could drop down to the $3,500 level, but that is not my base case at the moment. And I do believe we eventually break higher, looking towards $4,500, then possibly even $5,000 an ounce over the next several months.

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