Gold dropped deeper in the short term even if the US reported higher inflation. The yellow metal is traded at the 1,955 level at the time of writing. As you already know, the XAU/USD is in a corrective phase. In the short term, the price of gold dropped as the Federal Reserve is expected to hike rates on Wednesday.
Tomorrow, the Australian Monetary Policy Meeting Minutes and the US PPI could bring some volatility on XAU/USD. Still, the FOMC, BOE, and the Canadian inflation data could really shake the price during the week.
XAU/USD Challenges Critical Support!
As you can see on the H4 chart, the price ignored the 1,959 - 1,965 downside obstacles. Now, it challenges the uptrend line which represents dynamic support. As long as it stays above it, XAU/USD could still develop a new leg higher.
A false breakdown below the uptrend line, a bullish engulfing, or any other bullish pattern could bring new long opportunities. On the other hand, a valid breakdown below the uptrend line could announce more declines.
XAU/USD Outlook!
A false breakdown with great separation below the uptrend line or a major bullish engulfing followed by a strong bullish candle could bring new long opportunities. Coming back and stabilizing above 1,865 may indicate a potential new leg higher.
