- It has found support on the median line (ml).
- A valid breakout through the downtrend line activates the bullish formation.
- Only a new lower low validates further drop.
The gold price dropped in the short term. However, the sell-off could be over after failing to stabilize below $1,955.
The metal is trading at $1,961 when writing and is fighting hard to come back higher as the USD retreated a little. Yesterday, the US reported mixed data.
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The Flash Manufacturing PMI was reported higher at 49.0 points versus 46.1 points expected, while Flash Services PMI dropped from 54.5 points to 52.4 points.
Today, the US is to release high-impact data again. The CB Consumer Confidence is expected to jump from 109.7 points to 112.1 points.
Positive US data should help the greenback to dominate the currency market. This scenario may force the XAU/USD to drop.
Furthermore, the Richmond Manufacturing Index, HPI, and S&P/CS Composite-20 HPI data will be released as well.
Tomorrow, the Australian Consumer Price Index q/q is expected to report a 1.0% growth versus 1.4% growth in the previous reporting period, while CPI y/y could register a 5.5% growth.
Lower inflation could help the XAU/USD to jump higher. On the contrary, higher inflation could punish the price of gold, as the RBA should take action in the next monetary meeting.
Still, the most crucial event is represented by the FOMC. The FED is expected to increase the Federal Funds Rate from 5.25% to 5.50%. The FOMC Statement and FOMC Press Conference should shake the markets.
Gold Price Technical Analysis: Sell-Off Paused
From the technical point of view, the price action developed a flag pattern which could result in a new leg higher. XAU/USD found support on the descending pitchfork’s median line (ml), and now it challenges the downtrend line.
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A valid breakout through the flag’s resistance and above the weekly pivot point of 1,965 may announce a strong rebound. The ascending pitchfork’s upper median line (uml) represents a potential target. On the other hand, false breakouts above the downtrend line and making a new lower low activates a broader drop.
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