- Gold is bearish in the short term, so a further drop is favored.
- The FOMC should move the price today.
- The weekly S1 is seen as a potential downside target.
The gold price is trading in the red at $1,936 at the time of writing. It seems determined to approach new lows after the UK inflation figures.
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In the short term, the yellow metal extended its sell-off even though the Canadian CPI rose by 0.4% less versus the 0.5% growth expected.
Today, the United Kingdom Consumer Price Index reported a 10.4% growth in February, exceeding the 9.9% growth expected and the 10.1% growth in January.
In addition, the Core CPI surged by 6.2%, beating the 5.7% growth estimated and the 5.8% growth in the previous reporting period. Higher inflation should force the Bank of England to continue hiking rates in the next monetary policy meetings.
The FOMC could shake the price tonight. XAU/USD should register sharp movements on either side. As expected, the FED should deliver at least a 25-bps hike in the March meeting. The FOMC Press Conference, FOMC Statement, and FOMC Economic Projections represent high-impact events and could change the sentiment.
The SNB and the BOE are expected to hike the rates tomorrow. Finally, the US, Eurozone, and UK manufacturing and services data should move the XAU/USD on Friday.
Gold Price Technical Analysis: Corrective Phase
From the technical point of view, the price of gold ignored the uptrend line and the ascending pitchfork’s median line (ML). These represented downside obstacles. It has stabilized under the weekly pivot point of 1,947, signaling more declines. After its strong rally, a downside movement was natural.
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It tries to approach strong demand zones before jumping higher again. The 1,920 and the weekly S1 (1,907) represent downside targets and obstacles. Still, after its current sell-off, the rate could try to rebound. XAU/USD could try to come back to test and retest the pivot pound and the median line (ML) before resuming its sell-off.
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