However, initial trends are signaling that the precious metal might have placed a bottom already.

Last week gold prices touched levels above 1241.33 before retreating. The test of this level marks a test of resistance which previously served as support.

From the 4-hour chart’s perspective, gold prices have consolidated into a rising wedge pattern at the current levels.

A break down below this rising wedge could signal a potential correction to the downside.

Validating this view is the bearish divergence seen on the Stochastics oscillator as well.

A break down below 1234.43 level which previously marked the upside target from the ascending triangle pattern signals a correction toward the 1206.00 level.

A retest of this level would mark a retest of support as this level previously served as resistance.

From the longer chart time frame, a retest of 1206 could potentially mark a correct ahead of a rally.

This rally is eventually expected to push gold prices to the 1300 mark.

Therefore, in the short term, watch for gold prices as they post a correction to 1206.

A rebound off this level will mark a potential change of trend to the upside.