Gold Price Analysis: Trapped in descending triangle amid risk-off

• Gold is being squeezed in a triangle pattern amid recession fears and risk aversion. 
• A breakout would put the bulls in a commanding position, yielding notable recovery rally. 

Gold is struggling to shine amid fresh risk-off in the markets with prices trapped in a descending triangle pattern on the 4-hour chart. 

So far, the top end of the triangle, currently at $1,508, has proved a tough nut to crack. A breakout would imply an end of the sell-off from recent highs above $1,700 and could yield a rally to $1,550.

Alternatively, a triangle breakdown would suggest a continuation of the sell-off from $1,700 and expose support located at $1,445 (November low). 

At press time, the yellow metal is changing hands at $1,496 per Oz, representing a 0.11% drop on the day, even though the futures tied to the S&P 500 index are down 5%. 

"An economic tsunami has been unleashed. A consensus appears to be emerging among economists of the largest contraction in global GDP in a generation," according to Marc Chandler, Chief Market Strategist, Managing Partner, Bannockburn Global Forex.

Even so, gold is down 5.6% on a month-to-date basis, possibly due to the global dash for the US dollar. The greenback has become a preferred safe haven and the dollar index has gained over 4% so far this month. 

4-hour chart

Trend: Bullish above $1,508

Technical levels