Gold had quite the week.
Between the ongoing U.S.-Iran headlines and the dovish reaction from the U.S. dollar following Friday’s underwhelming Non-Farm Payroll report, there was plenty of fuel behind gold’s move higher.
But here’s the interesting part…
I’m actually watching for a potential short-term pullback in gold.
And there are two technical reasons why.
First, price is running directly into a previous level of structure.
This isn’t just any random level, either. It’s an area that previously acted as support before becoming resistance — what I like to call an “ice zone.”
Think of it like a sheet of ice:
It can support price from above, while simultaneously acting as resistance to price trying to break through from below.
Those types of levels can be pretty significant, especially when price returns to them after a strong directional move.
But there’s another reason I’m paying attention…
We also have an advanced pattern formation completing at this same area.
Specifically, a bearish Bat pattern.
The pattern is completing around the 88.6% Fibonacci retracement, and that completion zone lines up almost perfectly with the structure level I mentioned above.
That gives us something I always like to see:
Multiple pieces of technical confluence pointing toward the same area.
Now, this doesn’t mean I’m expecting gold to completely reverse and begin a massive bearish trend.
With advanced patterns, I’m often looking for something much simpler:
A period of relief.
And there are some pretty logical reasons why sellers could step in here.
Some traders have ridden gold higher throughout the week and may be looking to take some profits.
Meanwhile, newer buyers may not want to chase price at these elevated levels. They may prefer to wait for a pullback before looking for another opportunity to get long.
But before you jump into a gold short…
There’s a BIG warning you need to hear.
The geopolitical situation surrounding Iran remains a major wildcard, and any changes to the ongoing peace talks could have a significant impact on gold.
And then there’s the dollar.
The disappointing jobs report created a dovish reaction in the U.S. dollar, with the market adjusting its expectations around future Federal Reserve policy.
But here’s the thing…
The jobs data isn’t the only piece of the puzzle.
Inflation is still going to play a major role in determining what the Fed does next.
And we’re getting a major inflation report this Wednesday with CPI.
That release could have a significant impact on the dollar — and because of the relationship between the dollar and gold, it could create some serious volatility there as well.
So while the technical picture is giving me a potential short-term gold opportunity…
I’m not ignoring the fundamental landmines sitting underneath it.
That’s exactly why this week’s market analysis is so important.
If you have any questions, comments or want to share your view on Gold please leave them below. And I wish you guys a safe & profitable week of trading!
Akil