Gold Price Forecast: XAU/USD recovers above $3,300 with pressure building within a bull flag

• Gold prices bounce off moving average support, reclaiming the $3,300 level.
• XAU/USD technical levels remain firm within a bull flag pattern.
• Momentum remains neutral with a narrow range hinting at the potential for a breakout.

Gold prices are threatening key technical layers of support on Wednesday, with Bullion searching for a fresh catalyst to drive prices out of the confines of the bull flag pattern.

After erasing 1.25% on Tuesday, the momentum of the downtrend has temporarily paused. At the time of writing, Gold prices are trading above the $3,300 psychological level with the 20-day Simple Moving Average (SMA) providing additional support at $3,289.

The current zone of price action remains technically significant, as it aligns with the upper bound of the bull flag and the 23.60% Fibonacci Retracement level of the January-April move at $3,290.

Gold prices bounce off support as pressure builds within the confines of a bull flag

With the descending trendline from the bull flag providing an additional barrier of resistance for bulls near $3,320, bears have struggled to gain momentum below the Fibonacci support. 

With the Relative Strength Index (RSI) flattening around 52, the next big move for the yellow metal hinges on whether bulls or bears can break free from their relative zones of restriction.  

Gold daily chart

A breakdown below $3,200 could open the door toward the 38.2% retracement level at $3,161, followed by deeper support near the 50% and 61.8% Fibonacci levels at $3,057 and $2,952, respectively.

On the upside, a decisive breakout above the descending wedge, particularly a close above $3,350-$3,360, would likely attract bullish momentum. Such a breakout would target a retest of April's all-time high just below $3,500.