- The XAU/USD is bearish in the short term despite temporary rebounds.
- A new lower low activates more declines.
- The RBA should bring high action tomorrow.
The gold price rebounded slightly. However, the downside pressure remains high after better-than-expected US data was reported on Friday.
The yellow metal is trading at $1,872 at the time of writing, below today’s high of $1,881. After its massive drop, a rebound was natural. The USD rallied on Friday. That’s why XAU/USD dropped like a rock.
- Advertisement -
The US Non-Farm Employment Change came in at 517K in January, way above the 193K expected and compared to 260K in December. Furthermore, the Unemployment Rate dropped from 3.5% to 3.4%, even if the specialists expected a potential growth of 3.6%, while ISM Services PMI jumped unexpectedly higher, from 49.6 points to 55.2 points above 50.5 expected.
As long as the greenback continues to grow versus its rivals, the gold price could extend its losses below the multi-week lows.
Tomorrow, the Reserve Bank of Australia is expected to increase the Cash Rate from 3.10% to 3.35%. This is a high-impact event and should move the XAU/USD. The Fed Chair Powell Speaks at an important event as well. That’s why it’s risky to trade during it.
Gold price technical analysis: Minor rebound
From the technical point of view, the gold dropped as low as $1,861 on Friday, where it found support. Now, it’s trading again above the 38.2% retracement level but below the descending pitchfork’s lower median line (LML), representing a dynamic resistance.
After its massive drop, a temporary rebound was natural. It could test the near-term resistance levels before extending its downside movement. The weekly pivot point of 1,895 stands as a static upside obstacle.
Technically, coming back and stabilizing below 38.2% ($1,871) may announce a downside continuation. A new lower low, dropping and closing below $1,861, activates more declines towards the warning line (wl1) and down to the 50% retracement level of $1,843.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.