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  • The bias remains bullish as long as it stays above the uptrend line.
  • The fundamentals should drive the rate today.
  • Testing and retesting the uptrend line could announce a new leg higher.

The gold price dropped overnight after Fed hiked 50bps to 5%. The metal is trading at $1,792 well below Tuesday’s high of $1,824.

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The bias remains bullish despite the current drop. The XAU/USD lost its bullish momentum as the US dollar tried to rebound after its massive drop. 

Gold rallied on Tuesday as the US reported lower inflation. However, it gave up se of its gains after the FOMC. The FED increased the Federal Funds Rate by 50 bps, from 4.00% to 4.50% as expected. 

Today, the Australian Employment Change came in better than expected while the Unemployment Rate came in line with expectations. 

Later, the SNB is expected to increase the SNB Policy Rate from 0.50% to 1.00%, the BOE could raise the Official Bank Rate from 3.00% to 3.50%, while the ECB may deliver a 50 bps hike as well.

The fundamentals could really shake the markets, so XAU/USD could register sharp movements. In addition, the US is to release the retail sales data. Retail Sales may report a 0.2% drop, while Core Retail Sales is expected to register a 0.2% growth. 

The Empire State Manufacturing Index, Unemployment Claims, Capacity Utilization Rate, Industrial Production, Business Inventories, and Philly Fed Manufacturing Index will be released as well.  

Gold price technical analysis: Erasing gains

Gold price

From the technical point of view, the bias remains bullish as long as it stays above the ascending trendline. The $1,786 and the $1,781 represent key support levels. Now, it challenges the weekly pivot point of $1,791.

After its failure to stay above the $1,810 static resistance, a sell-off was natural. It dropped and closed below the median line (ML) of the descending pitchfork as well signaling strong sellers. 

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Taking out the support represented by the ascending trendline and the $1,786 could open the door for more declines towards the $1,772 and down to the lower median line (LML). Staying above the ascending line, testing and retesting, the price may trigger a new bullish momentum.