Gold edged higher and it was trading at 1,743 at the time of writing far above 1,707 today's low. The yellow metal rallied as the Dollar Index dropped after reaching the 108.56 static resistance level. As you already know from my analyses, we have a negative correlation between XAU/USD and DXY.
Today, the fundamentals took the lead. The RBNZ increased the Official Cash Rate from 2.00% to 2.50% as expected. As you already know, Gold is used as a hedge against inflation. The US CPI rose by 1.3% more versus 1.1% expected, while the Core CPI registered a 0.7% growth compared to 0.5% estimates.
Also, the BOC increased the Overnight Rate more than expected, from 1.50% to 2.50% above 2.25% expected. The BOC decision and higher US inflation pushed the yellow metal higher.
XAU/USD Upside Reversal?
As you can see on the H1 chart, XAU/USD found support on the channel's downside line. It has registered only a false breakdown below the downside line and through the weekly S1 (1,710) signaling that the sell-off could be over.
Now, it has managed to jump above the 1,732 static resistance and above the downtrend line. Stabilizing above these levels and validating its breakout from the down channel pattern could signal further growth.
XAU/USD Outlook!
The current breakout above the downtrend line signals strong buyers and a potential larger rebound. Coming back to test and retest the broken channel's resistance could bring long opportunities.
The 1,747 and 1,752 are seen as upside targets. After its strong rally, we cannot exclude a temporary retreat. A larger upwards movement could be activated by a new higher high. Jumping, closing, and stabilizing above 1,752 could activate further growth and could bring new buying opportunities as well.
