Gold dropped by around 8.4% from last week's high at 1,831.77 towards today's low at 1,677.68. The price action has printed a major false breakout with great separation through important support levels, downside obstacles.
The yellow metal dropped because USD rose versus its rivals. It remains to see how it will react ahead and after the US inflation data publication. As you already know, gold is used as a hedge against inflation, so we cannot exclude a potential growth around the US CPI and Core CPI release.
XAU/USD Amazing Sell-Off!
Gold stands at 1,729.71 level below the weekly S1 (1,737.25). The pressure is high even if the price has printed a false breakout with great separation through the upper median line (UML) and below 1,700.
Its failure to reach and retest the first warning line (WL1) signaled that the yellow metal could develop a downside movement. Staying above the upper median line (UML) may signal a potential rebound.
Outlook
Gold could come down to test and retest the upper median line (UML) and the S2 (1,711.68) before deciding direction. We have a strong confleunce area former at the intersection between these obstacles.
We'll have to wait for a strong bullish pattern before really considering going long again on Gold.
