The price of gold plunged today after failing to confirm a larger rebound. XAU/USD was trading at 1,765 at the time of writing and it seems very heavy in the short term. As we know from yesterday's analysis, Gold could drop deeper after stabilizing below the 1,783 key level.
Today, the fundamentals moved the markets. In the early morning, the RBNZ increased the Official Bank Rate from 2.50% to 3.0%, matching expectations. Furthermore, the UK reported higher inflation, while the US retail sales came in mixed.
Later today, the FOMC Meeting Minutes represent a high-impact event and could bring sharp movements, that's why you have to be careful.
XAU/USD Crashed Post UK Inflation
Gold rebounded yesterday after registering only a false breakdown through 1,773 but it failed to validate the breakout above the confluence area formed at the intersection between the S1 (1,779) and the upper median line (uml). The bearish engulfing signaled a sell-off at least towards the 1,773 key support.
Taking out this support opened the door for more declines. You knew from my previous analysis that XAU/USD could drop towards 1,765 after a valid breakdown below 1,773.
XAU/USD Forecast
Gold challenges the 1,765 downside obstacle. Closing and stabilizing below this level may signal more declines towards the S2 (1,756) and down to the 1,755 static support. Retesting the 1,773 level after its strong drop was seen as a short opportunity.
Testing and retesting the 1,765 mark and staying below this level could bring new short opportunities.
