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  • Taking out the downtrend line may announce a larger growth.
  • The US inflation should be decisive tomorrow.
  • False breakouts through the downtrend line invalidate the upside scenario.

The gold price is trading at $2,025 at the time of writing. However, it seems choppy with a mild upside bias.

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The precious metal rebounded after its massive sell-off even though the USD appreciated versus its rivals. Gold dropped as low as $1,999 on Friday as the US NFP, Average Hourly Earnings, and Unemployment Rate came in better than expected.

Yesterday, the Final Wholesale Inventories reported a 0.0% growth compared to the 0.1% growth estimated.

Technical factors could drive the markets today as we don’t have high-impact events. The US will release only the NFIB Small Business Index and IBD/TIPP Economic Optimism data.

The US inflation data tomorrow represents the most important event of the week. The Consumer Price Index m/m is expected to report a 0.4% growth in April versus 0.1% growth in March, while Core CPI may register a 0.3% growth.

Higher inflation could help the USD to appreciate in the short term as the FED could be forced to take action again. On the contrary, lower US inflation could boost the XAU/USD.

Gold price technical analysis: Awaiting catalyst

Gold price
Gold price chart

XAU/USD ended its sell-off and turned to the upside again. Its failure to stabilize below the $2,015 and the median line (ML) helped trigger a new leg higher.

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Now, it is almost to hit the downtrend line, representing a dynamic resistance. The rate tested and retested the weekly pivot point of 2,020. XAU/USD could extend its growth if it stays above it.

Still, how it reacts after reaching the downtrend line remains to be seen. A valid breakout activates a broader swing higher. The upper median line (UML) is seen as a major target. False breakouts through the downtrend line may announce a new sell-off towards the median line (ML).

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