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Gold Price Continues Downside After Lower Canadian Inflation

  • The bias is bearish, so a further drop is expected.
  • A new lower low activates more declines.
  • The S1 is seen as a potential target.

The gold price extended its sell-off, trading at $1,908 at the time of writing. The downside pressure is high and the XAU/USD could approach new lows.

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Fundamentally, Canada reported lower inflation in the last month compared to the previous reporting period, while the US data came in better than expected in the last trading session. That’s why the XAU/USD crashed.

The Canadian CPI registered a 0.4% growth, matching expectations, while Core CPI reported only a 0.4% growth versus the 0.5% growth forecasted.

Furthermore, the US CB Consumer Confidence, New Home Sales, Richmond Manufacturing Index, HPI, S&P/CS Composite-20 HPI, Durable Goods Orders, and Core Durable Goods Orders indicators reported positive data.

Today, the Australian Consumer Price Index reported a 5.6% growth versus the 6.1% growth estimated and the 6.8% growth in the previous reporting period.

Later, BOE Gov Bailey Speaks, BOJ Gov Ueda Speaks, and Fed Chair Powell Speaks should really shake the markets and could change the sentiment in the short term. Tomorrow, the US Final GDP and Unemployment Claims could move the price.

Gold price technical analysis: 1,910 support violated

Gold price
Gold price hourly chart

Technically, the XAU/USD escaped from the small triangle signaling more declines. The bias remains bearish as long as it stays below the median line (ml) of the descending pitchfork.

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The false breakouts above the triangle’s resistance announced strong sellers. Now, it has reached the $1,910 downside obstacle, which stands as downside obstacle.

Taking out this support should open the door for more declines. The next downside target could be represented by the weekly S1 (1,901). A valid breakdown should activate a larger downside movement through this obstacle.

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Olimpiu Tuns

Olimpiu Tuns

Olimpiu Tuns graduated with a Master in Business Administration and is a seasoned Market Analyst / Trader / Trainer with 10 years of experience in the financial markets having expertise in Forex, Commodities, Index, Cryptocurrencies, and Stocks. He worked as a Market Analyst for three major brokerage companies, as a prop trader, and as a contributor/content creator for news portals and educational platforms.