- The bias is bearish if it stays below the median line (ml).
- Taking out the 1,959 activates more declines.
- A strong bullish formation within the demand zone indicates a new bullish momentum.
The gold price slumped in the short term on Tuesday as the US dollar rebounded. The precious metal is currently trading at $1,968 and is under heavy pressure. After the recent swing higher, a correction is natural, and the USD may have been oversold despite the recent poor US data.
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Fundamentally, the Reserve Bank of Australia delivered a 25-bps hike as expected. Later today, the US Trade Balance is expected to come in at -59.7 billion, versus -58.3 billion in the previous reporting period. The IBD/TIPP Economic Optimism index is expected to jump from 36.3 points to 40.2 points, while Consumer Credit could be reported at 8.8 billion, versus -15.6 billion. In addition, the FOMC members’ speeches could bring high action as well.
Tomorrow, BOE Governor Bailey and Fed Chair Powell are scheduled to speak, which could have a big impact on the gold price in the short term. Positive US data could help the USD to appreciate and may bring more sellers to the XAU/USD pair. However, after the recent strong drop, buyers could jump in again. The DXY rebounded today, but this could be only temporary after the recent leg down.
Overall, the gold price is in a short-term correction, but buyers could jump in again if the USD weakens further. Traders should keep an eye on the upcoming US data and the speeches from BOE Governor Bailey and Fed Chair Powell for further direction.
Gold Price Technical Analysis: Bearish Dominance
The gold price crashed below dynamic support, signaling that a larger correction could be in the making. Buyers are exhausted, and sellers are in control, with the price now trading below the median line (ml) of the descending pitchfork.
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Traders are closely watching the price action at the current demand zone above the $1,959 level. If the price fails to hold above this level, it could extend its downward movement. However, a strong bullish formation within the current demand zone or false breakdowns with great separation could indicate that the correction could be over.
A larger correction could be activated after taking out the $1,959 support. Traders are advised to be cautious and to manage their risk carefully.
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Source: https://www.forexcrunch.com/gold-price-hits-support-at-1959-as-greenback-recovers/
