- The bearish pressure remains high as the USD remains strong in the short term.
- The down channel is seen as a bullish formation.
- The fundamentals could move the rate tomorrow.
The gold price turned to the upside on Friday as the dollar retreated across the board. The metal is trading at $1,846 at the time of writing.
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It has gained by 1.57% from Friday’s low of $1,818 to $1,847, today’s high. Still, the downside pressure remains high as the USD remains strong.
The US CPI and Core CPI came in line with expectations last week reporting higher inflation in January. Also, retail sales figures, PPI, and Core PPI came in better than expected.
Today, the US banks are closed, so the volatility could be low. Tomorrow, the fundamentals could shake the markets. The Canadian inflation figures, the US Flash Services PMI, and the UK manufacturing and services data represent high-impact events.
Furthermore, the RBNZ and the FOMC Meeting Minutes could bring strong action on Wednesday. The Reserve Bank is expected to increase the Official Bank Rate from 4.25% to 4.75%.
Hawkish FOMC Minutes could lift the greenback and could force the XAU/USD to drop. On Thursday, the Prelim GDP could report a 2.9% growth and should move the markets as well.
Gold price technical analysis: Down channel
From the technical point of view, the XAU/USD rebounded. Now it challenges the downtrend line and the weekly pivot point (1,844). It has developed a down channel pattern that could represent a bullish formation.
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Staying near the downtrend line may announce an imminent breakout. Taking out this dynamic resistance activates an upwards movement. This scenario could bring new long opportunities. The 38.2% (1,829) represents a downside obstacle.
Only dropping and stabilizing below it, registering a new lower low may announce a larger correction. Stochastic signals an overbought situation but it’s premature to talk about a new downside movement. In my opinion, only false breakouts could really signal a new sell-off.
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