The price of gold (XAU/USD) spiked at the start of this week to break out what appears to be a descending wedge and head towards the $1,300 level.
And over the last two days, it has oscillated within this range as it looks to create a new trading range around the $1,292-$1,300 level.
The price of gold is trading within this range for the first time in four weeks and this could prove to be a temporary scenario if the US-China trade conflicts are resolved.
XAU/USD (Gold) Fundamentals Overview
The precious yellow metal had rallied at the beginning of the week following what emerged as a potential climax of the US-China trade conflicts after Chin threatened to raise tariffs on $60 billion worth of US goods to 25%.
However, early on Wednesday, those fears appeared to dissipate after Trump tweeted to suggest that talks with China were not a lost course.
This gave capital investors some hope, which resulted in a temporary pullback in the price of the safe haven gold. Early on Thursday, the price of the yellow metal was holding firm around $1,296 per ounce.
XAU/USD (Gold) Technical Analysis (the 240-min Chart)
From a technical perspective, the price of gold recently broke out of what appears to be a descending wedge. This comes following the news that trade tensions between the US and China as well as Europe could be getting worse.
And now, the XAU/USD appears to be consolidating just below the key level $1,300 after the latest news that things could still be resolved. As such, the bulls will be targeting profits at around $1,300 while the bears will look to pounce at around $1,292.
XAU/USD (Gold) Technical Analysis (the Daily Chart)
In the daily chart, the picture is clearer on a long-term basis with the current trend pointing towards a bearish bias. The price of gold is currently tagging just underneath the 100-Day Moving average while the 200-Day counterpart is further below the current position of the descending wedge.
This suggests that even given the recent breakout, the bears maintain control, and this could prompt a pullback in the near future. Both the bulls and the bears will have multiple opportunities to profit from the current consolidation attempt.
In summary, the price of the yellow metal has recently experienced a short-term bullish run, which now appears to have ended. This returns the power to the bears as the week draws to an end.