- XAU/USD maintains a bearish bias in the short term.
- The US data should be decisive today.
- Gold could approach and reach new lows if it stays below the downtrend line.
The gold price registered a strong downside movement as the USD rallied. The metal is trading at $1,839 against yesterday’s low of $1,830.
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Fundamentally, the yellow metal extended its sell-off after the US reported higher inflation in January versus December. XAU/USD slipped lower also because of positive US retail sales data. However, Gold rebounded as the improved risk sentiment slightly weighed on the greenback.
The Retail Sales indicator reported a 3.0% growth, beating the 1.9% growth expected. Core Retail Sales rose by 2.3% versus the 0.9% growth expected, while the Empire State Manufacturing Index came in better than expected. Industrial Production and Capacity Utilization Rate reported poor data, while Business Inventories aligned with expectations.
Gold remains sluggish as the Australian Unemployment Rate and Employment Change worsened in the early morning.
Later, the US data should move the markets. PPI may report a 0.4% growth after the 0.5% drop in the previous reporting period. Core PPI is expected to register a 0.3% growth, while Unemployment Claims could jump to 200K from 196K. In addition, Building Permits and Housing Starts data will be released.
Gold price technical analysis: Down channel
Technically, the bias remains bearish despite temporary rebounds. Now, the price action has developed a down channel pattern. So, as long as it stays below the downtrend line, the XAU/USD could approach new lows.
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As you can see on the hourly chart, the price rebounded after reaching a demand zone and the weekly S2 (1,832). Still, the bounce back was stopped by the 50% (1,843) retracement level, and now it has turned to the downside again.
The US data could be decisive later today. That’s why the rate seems undecided right now. Positive data may force the XAU/USD to resume its downside movement.
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