Gold is trading around $4,180, above the 21 SMA and above the downtrend channel that has been forming since September 25.

Yesterday during the US session, gold formed a bullish flag pattern. After breaking above the 1/8 Murray level, we saw a strong upward move that could continue in the coming hours until the price reaches the strong resistance at the 2/8 Murray level and might even reach the 200 EMA around $4,262.

If price pulls back toward the upper band of the downtrend channel in the coming hours and consolidates above $4,140 and the 21 SMA, this will be a positive signal to buy gold in the coming days, with targets at $4,218 and $4,262. Finally, we expect it to reach the 3/8 Murray level around $4,296.

A pullback would be an opportunity to open long positions in anticipation of the price reaching $4,300 in the coming days.

Conversely, a drop below $4,140 could change the outlook for gold, and we could expect it to retest the 0/8 Murray level around $4,062.

The Eagle indicator is showing a positive signal. However, XAU/USD may be reaching overbought levels, so we should monitor the strong resistance zones at $4,195 and $4,218 in case a technical correction occurs.