Gold extended its sell-off after testing and retesting the near-term resistance levels. It has dropped as much as 1,631 today. The bias remains bearish as the Dollar Index has managed to rebound.
The yellow metal dropped deeper, even though the US Chicago PMI came in worse than expected. On the other hand, the Euro-zone data came in better than expected. The RBA could shake the price in the early morning. The Cash Rate is expected to be increased by 25bps. In addition, the US ISM Manufacturing PMI and JOLST Job Openings could have an impact.
Moreover, the Federal Reserve is expected to increase the Federal Funds Rate by 75bps again while BOE could increase the Official Bank Rate from 2.25% to 3.00%. These rate hikes could force the yellow metal to drop deeper.
Gold Sell-Off!
As you can see on the H1 chart, the rate tested and retested the channel's downside line before dropping deeper. You knew from my previous analysis that XAU/USD maintains a bearish bias as long as it stands below this line and under 1,645.
The next downside target and support and represented by the weekly S1 (1,630). After its massive drop, we cannot exclude a new rebound. 1,640 is seen as a static resistance.
XAU/USD Forecast!
As long as it stays below the downside line, the bias remains bearish. A valid breakdown below the S1 (1,630) activates more declines. This is seen as a new chance to go short. Also, temporary rebounds could bring us new selling signals.
