Gold prices have initiated a bullish correction phase around 2600, reinforcing the upward trend that has been active for over two months. Recently, prices climbed to 2666, surpassing a short-term downtrend line from September highs. To reach the top of 2670 or hit new highs near 2735, which aligns with the 161.8% Fibonacci extension, bulls must break above this trend line. If the rally continues, the next resistance might be around the 2800-2850 region, near the upper sloping channel's resistance line.
Currently, indicators such as RSI and stochastic oscillators suggest the early stages of this rally. Positive trend signals persist. If the Elliott wave pattern is accurate, precious metals could see a rise before switching to over-the-counter trading.
However, if prices fail to close above 2650, a drop could occur, with support near the 20-day moving average and the channel's support trend line around 2623. The 2600 level may be tested again. Should bears break this level, selling pressure might drive prices towards the 50-day moving average and the 38.2% Fibonacci retracement level of 2535 from the June to September uptrend. Continued weakness could quickly push prices down to the 50% Fibonacci levels of 2489 and 2458.
In summary, gold is expected to maintain its bullish momentum in the short term. Closing above 2650 might be crucial for enhancing buying interest at the bullish channel's top.
