Gold went nowhere despite the recent rally in commodities. Elevated inflation added to the pain that gold bugs had to go through for the past 18 months.
The correction is not over yet. Gold looks technically weak and probably consolidates within a bearish trend that started in August 2020. Most likely, an expanding leading diagonal unfolded initially. It penetrated the pale grey bullish trend, which carried gold higher since its 2019 break-out.
We witnessed choppy sideways action for the past year. Most likely, a contracting triangle formed during that time. The red-dotted supports and resistances depict the technical pattern. It could have ended on Jan. 25, 2022, or extended into Q2/2022.
The black and red paths show the pattern's most likely Elliott Wave paths. Both are bearish because triangle patterns resolve in the primary trend direction. The major trend is down for gold, and a sustained break below $1750 indicates that the next selloff started.
Bear trends have been risky in precious metals. A similar pattern unfolded in gold at the end of its bull run in 2011. A reversal was followed by a sideways consolidation back then as well. Back then, gold lost 35% within a few months after the sideways correction resolved to the downside.
The bottom line is that gold lost its shine. A sustained break below $1750 has substantial double-digit damage potential from a technical perspective.