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Heads up, gold bugs!

I’m seeing a classic chart pattern forming on the short-term chart of the precious metal.

Think it’s about to bust out soon?

Gold (XAU/USD): 4-hour

Gold (XAU/USD) 4-hour Chart

Gold (XAU/USD) 4-hour Chart

Don’t look now, but gold seems to be forming a descending triangle pattern!

This chart formation is still lookin’ pretty fresh, so the commodity price might keep bouncing up and down inside the triangle for now.

Besides, technical indicators are giving mixed signals when it comes to direction, so traders might simply be holding out to see how the rest of the week plays out.

The 100 SMA is below the 200 SMA to indicate that another dip to the bottom is likely, but Stochastic looks ready to pull higher so gold prices might follow suit.

Market sentiment seems to be in flux right now, and all eyes and ears are on the Fed. Will they hike by another 0.75% or will they announce a more cautious 0.50% rate increase instead?

The upcoming NFP release might also provide some context for the FOMC decision and future policy  moves. Another upside surprise in hiring would keep the Fed on its aggressive tightening route and might bring more gains for the dollar.

In effect, this could translate to another set of losses for commodities, including gold. After all, a stronger dollar and much higher borrowing costs ain’t lookin’ good for this inflation hedge!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.