Gold (XAU/USD) Price Forecast: Key Battle at 20-Day Average Support
Author: Bruce Powers
Published: December 30, 2025
Market Overview
Gold prices experienced a significant pullback, reaching a low of $4,303, which successfully tested the critical 20-day moving average as support. Following this, a bounce was observed, but a decisive break below this level could lead to a deeper correction towards $4,172.
Technical Analysis
Failure of 10-Day Moving Average
The week began with a sharp decline, marking a seven-day low. The price fell below the 10-day moving average, which had previously served as dynamic support. This failure indicates a potential shift in market sentiment.
20-Day Average and Trendline Confluence
The 20-day moving average, currently at $4,314, is a significant trend indicator due to its longer scope and its confluence with a short-term rising trendline. The recent pullback is the first since gold confirmed a continuation of its long-term bull trend with a new daily closing high on December 22, which led to a record high of $4,550 before the recent sell-off.
Risk of Deeper Correction
Monday's low at $4,303 is marked as a significant support area, but there is a risk of a deeper correction if this level is decisively broken. A drop below this could lead to testing the 50-day moving average at $4,172, which is further supported by a prior weekly low at $4,170.
Overhead Resistance and Upside Price Targets
Resistance levels are identified near two initial upside targets. The price reached a 127.2% extension of the October correction at $4,516 and a 161.8% projected rising ABCD target at $4,578. These levels are critical as they represent potential resistance zones on the way to the previous record high.
Outlook
The outlook favors a recovery from the 20-day average towards new highs, given the long-term bullish trend structure. However, a sustained decline below Monday's low would indicate weakening in the short-term bullish trend represented by the 20-day average. Holding above the 50-day average remains bullish in the long term, but a drop to that level could signal a shift in market dynamics.
Conclusion
In summary, the gold market is at a critical juncture, with the 20-day moving average serving as a key support level. Traders should monitor this area closely, as a break below could lead to further declines, while a bounce could signal a continuation of the bullish trend.