In our earlier post titled “Bears Won the Battle for Gold”, the bearish momentum appeared dominant. However, that victory proved short-lived. An inverse head and shoulders pattern has now formed, and both this pattern and the downward trendline from the 3500 top have been broken. Despite this, the previous high at 3366 continues to hold, leaving the breakout unconfirmed for now.

The shift in fundamentals is notable. Trade tensions between the U.S. and China have re-escalated, with both sides accusing each other of violating the trade treaty, fueling risk-off sentiment and supporting gold.

Two key technical levels will now shape the short-term direction:

1- 3320 Retest: If gold retests and holds above the 3320 level, this would likely signal that another bullish leg is in motion.

2- Breakout of 3366: A clear move above the previous top would provide further confirmation of bullish momentum.

On the flip side, a sustained break below 3320, especially if accompanied by a de-escalation in trade tensions, progress on trade deals involving the U.S., China, or the EU would favor a bearish reversal.

For now, gold traders should stay alert to news headlines and closely monitor 3320 and 3366 as key decision points.