Missed the head and shoulders breakdown we were watching on gold prices a few days back?

The precious metal is in the middle of a correction to this area of interest!

Take a look at these near-term inflection points I’m watching on the 4-hour time frame:

Gold (XAU/USD) 4-hour Chart by TradingView

Check out that sharp neckline breakdown after the U.S. election results came in!

Investors seemed to cash out on their safe-haven holdings while the exit polls indicated a likely victory for U.S. President Trump, as the dollar bulls also charged on expectations of a less dovish Fed.

However, when the FOMC statement came in, it revealed that policymakers intended to stick to their easing bias to ensure that inflation moves close to target so the dollar wound up returning some of its gains.

This allowed XAU/USD to pull up close to the broken neckline support, which might hold as resistance this time.

Is gold about to gain traction on its selloff?

Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!

The area of interest coincides with a broken ascending trend line that had been holding since mid-October, as well as the 50% Fibonacci retracement level. A higher correction could reach the 61.8% Fib around $2,734, which could be the line in the sand for a bearish pullback.

Keep in mind that the 100 SMA is still above the 200 SMA to suggest that the path of least resistance is to the upside or that there’s a chance the uptrend could resume.

If any of the Fibs hold, on the other hand, look out for gold bears setting their sights back on the swing low near S3 ($2,645.33) or down to the next potential floor at S4 ($2,605.62).

As always, watch out for headlines that could impact overall market sentiment, and make sure you practice proper position sizing when taking any trades!