The precious metal has resumed consolidation, and it appears that a breakout is imminent.
You can see that XAU/USD formed lower highs on the hourly time frame below and found support at $1,940 to form a descending triangle pattern.
Price is currently testing the triangle's support level once more as it considers whether to attempt a break below the resistance level or make another bounce to the level.
Because this floor has held for more than a few weeks, gold bulls may be prepared to attack at this point.
However, technical indicators are sending conflicting messages.
Because the 100 SMA is lower than the 200 SMA, it is possible that gold may decline by the same amount as the triangle formation if support breaks.
However, Stochastic is already sinking into the oversold area, which indicates seller fatigue. If the market were to move higher, it might mean that bullish momentum will pick up again, driving XAU/USD back to the $1,970 triangle top.
The dynamic resistance levels of the moving averages, which are located between $1,950 and 1,960, may also act as a ceiling for a prospective gold surge.
Remember that the precious metal recently experienced a double top breakdown, which suggests that long-term negative sentiment may be at play.
