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Remember that fresh triangle pattern we were watching on gold a while back?

Well, I’m seeing test of resistance happening now!

Do you think sellers will return right here?

Gold (XAU/USD): 4-hour

Gold (XAU/USD) 4-hour Chart

Gold (XAU/USD) 4-hour Chart

This precious metal has zoomed right back up to the top of its descending triangle pattern, and it looks like resistance is holding.

If that’s the case, gold could retreat from the $1,680 area to the triangle support around $1,620 again. On the other hand, a break above current levels could set off a rally to the next upside barrier.

By the looks of it, technical indicators are favoring a bearish scenario.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the ceiling is more likely to hold than to break.

In addition, Stochastic is hovering around the overbought territory to reflect exhaustion among buyers. Heading back down would mean that sellers have regained the upper hand.

Sustained bearish pressure might even spur a break below the triangle bottom, which could trigger a selloff that’s the same height as the chart pattern.

This inflation hedge would likely take cues from the U.S. CPI release this week, as this report would show whether or not price pressures continue to pick up.

A bit of a slowdown is eyed, which might be enough reason for gold bugs to close off some of their long positions. Weaker than expected U.S. inflation data might even spur a sharper decline in gold prices.

Don’t forget to account for the average volatility of gold when setting your entries and exits!

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.