Gold prices (XAU/USD) are currently trading around $2,340, exhibiting a slight rebound after a significant sell-off last week. This pullback comes amidst a quiet market environment due to holidays and anticipation of key US inflation data later this week.

Reasons for the Pullback:

• Oversold Conditions: Gold’s recent decline might have been excessive, prompting a technical correction.
• Reduced US Rate Cut Expectations: Improved US economic data has led to a decrease in market expectations for a near-term Fed rate cut, which could be slightly positive for Gold.

Technical Analysis:

• Short-Term Downtrend: Despite the pullback, Gold might still be in a short-term downtrend due to the recent break below a key trendline.
• Bear Flag Pattern: The current pullback could be a Bear Flag continuation pattern, suggesting potential further downside.
• Downside Targets: Conservative targets for a decline include $2,303 (Fibonacci retracement) or $2,272 (previous support level). A break below the $2,325 low would confirm this bearish scenario.
• Bullish Counterpoint: The Moving Average Convergence Divergence (MACD) indicator hints at a possible upside correction, but price action needs to confirm this.
• Medium- and Long-Term Bullishness: Despite the short-term weakness, Gold’s medium- and long-term technical outlook remains bullish.

Key Event:

• US Inflation Data: The release of US inflation data later this week will be a major market mover. Positive inflation data could reignite concerns about rising interest rates, potentially pressuring Gold prices.

Overall:

Gold’s current price action is a tug-of-war between short-term technical weakness and underlying long-term bullishness. The upcoming US inflation data will be crucial in determining the direction of Gold prices in the near term. A decisive break above the $2,360 trendline would signal a potential reversal of the short-term downtrend.