- The price of Gold could extend its downside movement after breaking below the immediate support levels.
- A new lower low may activate more declines in the short term.
- The FOMC could be decisive later today, the high-impact event could bring sharp movements.
Our gold forecast sees the yellow metal plunge as the DXY rallies at the moment of writing. Gold is trading at the 1,769.34 level below its previous low of 1,771.98, signalling strong sellers and potential deeper drop. As long as the Dollar Index continues to grow, the price of gold could approach and reach fresh new lows.
Earlier today, the USD received strong support from the US ADP Non-Farm Employment Change indicator which was reported at 571K far above 400K estimates and above 568K. The DXY rallied after the indicator was published, causing a sell-off in Gold.
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Later, the ISM Services PMI economic indicator is expected at 61.9 points, the Final Services PMI could remain steady at 58.2 points, while the Factory Orders could register a 0.1% growth in September versus 1.2% growth in August.
Still, the main event is represented by the FOMC. As you already know, the Federal Reserve is expected to keep its monetary policy unchanged. You should be careful as the FOMC Statement and the FOMC Press Conference could shake the markets and could bring sharp movements. Don’t forget that the sentiment could change if the FED will be more dovish later today.
Gold Forecast: Price Technical Analysis – Sell-Off
Gold failed to stay within the ascending pitchfork’s body signalling that the upside is over. Also, the rate dropped again below the downtrend line swing that the sellers are in full control. Now, it has plunged under the 1,771.98 former low which represented a downside obstacle.
XAU/USD challenges the weekly S1 (1,766.83). Making a valid breakdown below this obstacle may announce more declines. From the technical point of view, its incapacity to approach and reach 1,813.84 in the previous attempts and failing to stabilize above the median line (ml) showed exhausted buyers.
At the moment of writing, the price of Gold escaped also from a minor down channel pattern. The breakdown indicates a downwards movement. Also, escaping from the ascending pitchfork’s body activated a new leg down.
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