The price of gold dropped as much as 1,626 in the early morning when it found demand. Now, it is located at about 1,639 at the time of writing. After its massive drop, a rebound was natural.
Fundamentally, XAU/USD extended its sell-off as the DXY rallied after better-than-expected US data was reported on Friday. The Flash Services PMI was reported at 49.2 points versus the 45.5 expected, while Fash Manufacturing PMI came in at 51.8 points compared to the 51.0 points estimated.
XAU/USD Retests 1,641 Resistance!
XAU/USD accelerated its sell-off after dropping again below1,641. You knew from my previous analysis that a new lower low after retesting 1,654 - 1,659 activates more declines.
It was almost to reach the weekly S1 (1,626) which was seen as a downside obstacle. Now, it has registered a strong rebound signaling exhausted sellers. In the short term, the rate could test and retest the near-term resistance levels before dropping deeper.
XAU/USD Outlook!
Testing and retesting 1,641, registering only false breakouts may signal a new sell-off. The price could come back down to 1,626 today's low.
A larger rebound could be activated by a valid breakout above 1,641 and if jumps and closes above 1,646 today's high.
