The price of gold dropped like a rock after reaching the 1,728 level. Now, it is trading at 1,708 and it tries to rebound and recover after its massive drop. Still, technically, the bias remains bearish despite temporary throwbacks.
XAU/USD rallied after the BOC increased the Overnight Rate from 2.50% to 3.25%. Today, the yellow metal plunged after the ECB increased the Main Refinancing Rate to 1.25% as expected. The European Central Bank is expected to continue hiking rates in the next monetary policy meetings.
Gold stays lower also because the FED is expected to increase the Federal Funds Rate by 50bps or 75bps in September.
XAU/USD New Range!
After its massive drop, XAU/USD could try to rebound. 1,707 and the ascending pitchfork's lower median line (lml) represent support levels. XAU/USD dropped after registering only a false breakout through the confluence area formed at the intersection between the median line (ml) with the downtrend line.
As long as it stays under the downtrend line, the bias is bearish. In the short term, it could come back to test and retest the downtrend line as long as it stays above the lower median line (lml).
XAU/USD Forecast!
A valid breakdown through the lower median line (lml) activated a deeper drop towards 1,688.
Only a new higher high, a valid breakout above the 1,726 static resistance confirms a larger rebound.
