Head & Shoulder pattern alert on Gold: the yellow metal slipped below $3300 on US-China trade deal hopes

Gold prices drifted below $3300 on Friday, erasing its Thursday's gains, as reports of China considering a suspension of 125% tariffs on selected U.S. imports weakened the metal's safe-haven appeal. According to a report by Bloomberg, China, the world's leading plastics producer, may exempt imports of petrochemical feedstocks—such as ethane and liquefied petroleum gas—from tariffs if trade talks with the U.S. yield positive results. Optimism around a potential de-escalation in the US-China trade tensions is dampening demand for the safe-haven metal.
Additionally, US Dollar is exhibiting signs of recovery from its three year low. Renewed strength in the greenback is further contributing to the downside in gold. 

XAU/USD TECHNICAL OVERVIEW

Technical Structure: After a tremendous rally from the levels of $2900 towards $3500, Gold is finally forming a Terminal Head & Shoulder Pattern on 4hr Time Frame, a potential sign of trend exhaustion. This pattern is emerging at the terminal point of rally where buyers may be losing strength and sellers are beginning to step in. Generally the Neckline of this pattern would serve as the activation level which is at $3260 mark. Contrarily, a close above $3370 would negate the pattern. 

Technical Target Zones

POTENTIAL TARGET 1: $3150(± $20). First target zone post breakdown. This level might see some short-covering or bounce as it's a structurally important support. 

POTENTIAL TARGET 2: $3020 (± $20). Deeper correction level and potential full target of the H&S pattern. If reached, this would confirm a stronger bearish reversal from the top.