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  • The XAU/USD seems determined to approach and reach new highs.
  • DXY’s deeper drop could push the yellow metal higher.
  • The US data could bring high volatility later today.

The price of Gold rallied in the short term as the USD lost some ground versus the other major currencies. After its strong rally, the Dollar Index turned to the downside.

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A temporary correction was natural, so the XAU/USD took advantage of this situation. Technically, the yellow metal signaled exhausted sellers after its massive drop. Now, it has turned to the upside and seems determined to approach new highs.

Gold rallied after the US Flash Services PMI and Flash Manufacturing PMI came in worse than expected on Tuesday. Yesterday, the US data came in mixed. Today, the US data will be decisive. The Flash GDP is expected to register a 0.7% drop versus a 0.9% drop in the previous reporting period, while the Unemployment Claims could be reported at 250K in the previous week.

Dollar Index price technical analysis: Correcting lower

US dollar index price

As you can see from the hourly chart, the Dollar Index almost reached 109.29 higher, representing an upside obstacle. In the short term, the pressure is high after failing to stabilize above the R1 (109.02) and above the ascending pitchfork’s upper median line (UML). A deeper drop towards the median line (ml) may force the USD to depreciate. This scenario could help the XAU/USD to jump towards new highs.

Gold price technical analysis: Gaining above $1,760

gold price

Technically, the XAU/USD escaped from a Falling Wedge pattern. It has reached the weekly pivot point of 1,765, representing an upside obstacle. A valid breakout may signal further growth, while false breakouts could announce a potential drop.

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Breaking above 1,754 confirmed a larger leg higher. Temporary retreats could bring new long opportunities in the short term. The 1,771 – 1,773 area represents an upside obstacle. Strong consolidation above the weekly pivot point could also announce an upside breakout through this zone. The price of Gold could start dropping again if the Dollar Index jumps higher.

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