Gold is trading in the green after the last two session's drop, it is located below the $1,700 psychological level and is facing tough selling pressure. The price could drop deeper in the short term if the USD dominates the currency market.
The USD appreciation has sent the yellow metal lower in the last two days, but we still need a confirmation that Gold will register a corrective phase. The US will publish the CPI and the Core CPI today, some poor data will boost the gold price and will weaken the dollar, while better figures will lift the USD and could attract more sellers on gold.
Gold is trading near $1,700 as the global risk caused by COVID-19 crisis remains high. The outlook is bullish, even if the price has shown some exhaustion signs. As I said in yesterday's analysis, we can sell gold after a valid breakdown below the $1,671 - $1,666 area and we can go long only after a valid breakout from the minor triangle, above the $1,723 former high.
The price has failed to approach and reach the upper median line (UML) of the ascending pitchfork in the last attempts, signaling a selling pressure and a potential drop at least till the median line (ML). I believe that a valid breakdown below the monthly Pivot Point ($1,666) and below the median line (ML) will announce that the upside movement is finished and that a correction will develop.
RSI is signaling a bearish divergence, but it is premature to talk about a significant drop as long as the price is traded above the inside sliding line (SL - ascending dotted line) and within the minor triangle.
- GOLD TRADING TIPS
A further decrease and a valid breakdown below the PP ($1,666) and below the median line (ML) will bring a selling opportunity with targets at $1,600, $1,555, at the lower median line (LML), and at the $1,484 major static support.
On the other hand, a valid breakout above the $1,723 previous high and above the triangle's resistance will signal a further increase towards the R1 ($1,767), to the upper median line (UML), and towards the $1,800 level. I really hope that we'll have a clear direction and a fresh signal after today's US CPI figures.
