Gold Price Forecast: Rally likely after daily close above 20-day MA

The gold daily chart shows bullish falling wedge breakout.
But, the bulls need a break above the 20-day moving average (MA).

Omkar Godbole FXStreet Contributor

Gold (XAU/USD) could see a quick rally to $1,326 (May 11 high) if the bulls succeed in piercing the 20-day moving average.

Daily chart

Chart source: Netdania

The metal closed at $1,297 yesterday, signaling an upside break of the falling wedge - a bullish reversal pattern. The recovery from Friday's low of $1,288 also established a higher low pattern.

So, the stage is set for a minor rally, possibly to $1,326 (May 11 high). However, the metal is yet to find acceptance above the 20-day MA.

The moving average has consistently capped upside in the yellow metal since May 11. Note, how the metal failed to take out the 20-day MA last week, despite Italy-led risk aversion in the markets.

Hence, only a close above the 20-day MA would open up upside towards $1,326.

The bullish falling wedge breakout has set the stage for a convincing move above the 20-day MA. Still, if the metal fails to cross the moving average hurdle, then the bears will likely make a strong comeback. In this case, prices could drop below the recent low of $1,282.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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