Double-top pattern to signal a further drop in gold?
Gold bulls got their wish on Friday as price retested the February highs of $1,346.80 and briefly eclipsed that level amid a weaker dollar. However, with Trump deciding to suspend tariffs against Mexico indefinitely and the dollar recouping losses to start the week, it has helped to push gold lower by nearly 1% today.
Of note, price is now starting to creep below the 23.6 retracement level (red) of the recent swing higher @ $1,329.73. But for me, the near-term direction is more telling of gold's momentum currently.
Price has fallen back below the 100-hour moving average @ $1,331.93 and that means the near-term bias is more neutral now after a solid week of gains and bullish near-term bias. The 200-hour moving average is seen @ $1,313.62 and will prove to be a key level to watch out for as buyers and sellers battle it out for near-term control.
With the threat of Mexico tariffs put on ice for now, risk assets may shine temporarily as we start the week. However, global trade tensions aren't going to disappear so that is something that will still weigh on markets in the medium-term.
For gold, there's good reason for buyers to take money off after the recent run higher and more so from a technical perspective as a double-top pattern has been formed.
Looking ahead, there's still room for appreciation in gold in the bigger picture as global economies continue to struggle and central banks grow increasingly more dovish. But for now, the chart is telling us that we're at a pause in the recent momentum higher and it's time to reevaluate before jumping into the next trade for gold.
