Gold plunged after the BOC policy decision and after the DXY had started to increase from yesterday's low. Technically, the yellow metal has shown some overbought signs lately, so the current drop is natural.
It's trading at 1,879.69 level at the moment of writing far below the 1,900 psychological level, upside obstacle. The volatility will be high around the ECB policy announcement and the US inflation data publication. The US CPI is expected to slow down a pace of growth to 0.4% in May versus 0.8% in April, while the Core CPI could ease its acceleration to 0.5% compared to a 0.9% rise.
Moreover, the Unemployment Claims could drop from 385K to 370K last week. The ECB is expected to maintain its monetary policy unchanged in today's meeting.
XAU/USD More Downside In View!
Gold could drop deeper after failing to stabilize above the ascending pitchfork median line (ml). It has retested it and now it seems vulnerable to slide further. DXY's further growth could really bring a strong sell-off.
The next downside target is seen at the downside sliding line (sl). Also, its failure to stabilize above the weekly pivot point signaled a potential drop towards the S1 (1,859.44).
Gold Forecast!
Dropping and retesting the weekly pivot point (1,888.03) is seen as a selling opportunity in the short term. The bias is bearish as long as the price stays below this level. In case the US CPI is in line with expectations or better, this could push Gold lower towards 1,870, 1,860, and 1,850 levels.
