Gold bulls got trapped around the 6-year high of 1,500 and the 61.8% Fibonacci of the long downleg from 1,796 to 1,046 after gaining more than 3.5% last week.
Technically, the market could soften in the short-term as the RSI and the Stochastics seem to be slowing down in the overbought territory. The flattening Tenkan-sen and the stable Kijun-sen are also an indication that the market could trade more cautiously in the short-term.
Yet the higher highs and the higher lows over the last year and a price well above simple moving averages (SMA) and the Ichimoku cloud suggest that the upward pattern may stay for longer period.
The 20-day SMA has been capping bearish movements in the past four weeks and hence could reasonably attract attention if the bears retake control. A decisive close below that line and more importantly under the 50% Fibonacci of 1,421 would shift the spotlight towards the 1,400-1,380 area, where any break lower would confirm the end of the bullish phase. In the medium-term picture, however, the sell-off should run under 1,350 to resume neutral conditions.
In case the 1,500 mark allows for more upside, the rally may extend until 1,560, a restrictive zone during the 2011-2013 period. Higher and above 1,600, resistance could be detected around the 78.6% Fibonacci of 1,635.
Summarizing, gold is holding a positive status, though some weakness is likely to emerge in the near-term as the market seems to have entered overbought borders.