- The retreat could be over after failing to stay below the pivot point.
- The 38.2% retracement level represents an upside target.
- The UK inflation data should bring high action.
The gold price is trading in the green at $1,956 at the time of writing. After its downside correction, a bullish breakout was inevitable.
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The US dollar’s weakness forced the yellow metal to drop a little in the short term. Yesterday, the US NAHB Housing Market Index came in better than expected, while the Canadian IPPI and RMPI came in worse than expected.
Today, the Australian Monetary Policy Meeting Minutes, Switzerland Trade Balance, and Japanese Revised Industrial Production brought more action.
Later, the Eurozone Current Account is expected at 27.3B versus 31.2B in the previous reporting period, while the US Building Permits and Housing Starts could remain at 1.42M and 1.40M for the second month in May.
In addition, the Australian CB Leading Index and New Zealand GDT Price Index data will also be released.
Tomorrow, the fundamentals should shake the XAU/USD. The United Kingdom Consumer Price Index is expected at 8.4% versus 8.7% in the previous reporting period, while the Core CPI could be reported at 6.8%.
Furthermore, the Canadian retail sales data and the Fed Chair Powell Testifies should have an impact as well.
Gold price technical analysis: Rebound attempts
Technically, the XAU/USD dropped slightly after registering a false breakout through the 38.2% ($1,966) retracement level. It has failed to stay below the weekly pivot point of $1,951 and seems determined to rebound.
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The metal challenges the descending pitchfork’s upper median line (uml), representing a dynamic resistance. A valid breakout through the confluence area formed between the weekly pivot point and the upper median line should announce further growth.
After the last strong leg higher, a retreat was natural. The 38.2% (1,966) retracement level remains an upside target. Only invalidating the breakout through the upper median line (uml) and making a new lower low activates a larger drop.
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