Early in the American session, gold is trading around 2,523 near the all-time high, forming a double top pattern. We believe that if gold consolidates below 2,525 in the next few hours, a technical correction will follow and we expect the instrument to reach 2,510, which represents the weekly close. Below this area, the price could reach 2,504, a level coinciding with the 21 SMA, and finally, hit the psychological level of 2,500.
Gold might resume its bullish cycle from the point of technical analysis on the H4 chart. Another bullish argument is that the eagle indicator is showing a positive signal. A technical bounce at 2,504 or 2,490 could be seen as an opportunity to buy So, we could expect the XAU to reach +1/8 Murray located at 2,539 in the short term. The ultimate upward target is 2.578 (+2/8 Murray).
The bullish trend in gold still prevails. If the metal closes below 2,490 on the H4 chart, the outlook will change and gold could pull back and make a strong technical correction with the first target at the 200 EMA located at 2,439. Eventually, gold could reach 6/8 Murray at 2,421.
The double top pattern could be confirmed when gold breaks below the psychological level of 2,500. On the other hand, the outlook will remain bullish above 6/8 Murray. Therefore, any pullback will be seen as an opportunity to buy.