The price of Gold rallied in the short term as the Dollar Index retreated after yesterday's rally. XAU/USD was traded at 1,705 at the time of writing and it could approach and reach the near-term resistance levels.
Technically, the current rebound was natural after its massive drop. Today, the price could be driven by the fundamentals. The Non-Farm Payrolls indicator could be reported at 295K in August versus 528K in July, the Unemployment Rate could remain steady at 3.5%, while Average Hourly Earnings could report a 0.4% growth.
XAU/USD Strong Rebound!
As you can see on the h1 chart, XAU/USD found support right below the channel's downside line. It has registered only a false breakdown and turned to the upside. It challenged the S1 (1,706) static resistance (support turned into resistance).
In the short term, it has developed a flag pattern which is seen as a bearish formation. 1,711 and the downtrend line represent major upside obstacles.
XAU/USD Forecast!
Testing and retesting 1,711 and the downtrend line, registering only false breakouts may signal a new sell-off. Staying under the downtrend line and making a valid breakdown below the minor uptrend line may signal more declines and could bring new short opportunities.
Only a valid breakout through the downtrend line could activate a larger leg higher.
