XAU/USD is trading around 1,871.57, within a symmetrical triangle. Gold is trading below the strong resistance of 1,875 – 1,881. The yellow metal remains firm, although showing signs of exhaustion. So, if it fails to consolidate above 1,881, a technical correction could occur in the next few hours.
The stability of XAU/USD around highs in a few months is behind the weakness of the US dollar and the decline in Treasury yields. In case the yields of the benchmark bonds recover in the next few days, it could weaken the strength of gold and it could fall to 1,812 levels.
The eagle indicator reached extremely overbought levels last week and is now moving away from this level, which is a sign that gold could have a technical bounce and reach the resistance zone of 1,880 again.
The symmetrical triangle pattern could offer a bullish signal. However, gold will need to consolidate above 1,881 for this signal to be confirmed. Then, it could reach +1/8 Murray located at 1,906.
In case gold fails to consolidate above this area of 1,881, a pullback towards this level would be seen as a clear signal to sell, with targets at 1,875. Below 8/8 Murray, we could expect a sharp decline towards the 21 SMA located at 1,858.
This technical correction could give the XAU/USD pair a chance to continue higher, only if it trades above 1,860. Below this level, gold is expected to start a new bearish sequence and could reach 1,843, and even the bottom of the uptrend channel around 1831.
The 4-hour chart shows that the bulls remain in control of XAU/USD, although they are undecided, as the market is overbought and a strong technical connection is likely to be an opportunity to resume the bullish cycle.
Our trading plan for the next few hours is to sell gold if it reaches 1,875 - 1,880. Within this range will be the signal to sell with targets at 1,870 and 1,858 (21 SMA).
