Gold futures gap up in early Thursday trade

Introduction

Gold futures (GC) have surged to $2,799, marking a strong gap up and a direct test of the all-time high (ATH). This breakout attempt follows the completion of a bullish symmetrical triangle pattern. The market remains highly reactive to macroeconomic conditions, with gold benefiting from inflation concerns, central bank policies, and renewed safe-haven demand. Let’s now take a closer look at the technical analysis.

Technical analysis

Gap Up & ATH Test

• Price opened with a gap up, a big bullish sign if the candle closes green for the day.
• The move has led to a test of the ATH.

Breakout from Symmetrical Triangle

• The symmetrical triangle pattern that had been forming since November has seen price break to the upside after the price remained within the pattern for 3 months.
• There is a potential price target of $2,850 – $2,900 now.

Support & resistance levels

Resistance Levels (Upside Targets)

1. $2,799 (ATH Test Zone) – The all-time high is being tested; a confirmed breakout could lead to further price expansion.
2. $2,850 – $2,900 (Target from Triangle Breakout) – Next potential upside targets if gold sustains momentum.

Support Levels (Downside Risks)

1. $2,750 (Gap Fill Level) – If price retraces, this would be the first key support.
2. $2,684 (50-day SMA).
3. $2,669 – $2,650 (Triangle Resistance Turned Support) – The previous breakout zone, which must hold to maintain bullish momentum.
4. $2,540 (200-day SMA) – Long-term trend support and the last major downside buffer.

Scenarios to watch

Bullish Case (Higher Probability – 70%)

• A sustained move above $2,799 (ATH) confirms a breakout, targeting $2,850 – $2,900 in the coming sessions.
• A retest of the breakout zone near $2,750 – $2,770, followed by a strong bounce, would validate the breakout structure.

Bearish Case (Lower Probability – 30%)

• If gold fails to hold above $2,799, a short-term pullback toward $2,750 (gap fill level) could be seen.
• A break below $2,684 (50-day SMA) would suggest a deeper retracement, with a potential test of $2,650 – $2,669 support.

Trade setups

Bullish Setup (Breakout Continuation)

• Entry: Long on a confirmed breakout above $2,800, targeting $2,850 – $2,900.
• Stop-Loss: Below $2,770 to minimize downside risk.

Bearish Setup (Rejection Trade)

• Entry: Short if price rejects the ATH ($2,799) and fails to hold above $2,770, targeting $2,750 – $2,700.
• Stop-Loss: Above $2,810 to limit losses.