The yellow metal slipped lower in the short term but the bias remains bullish. It's located at 1,967 at the time of writing. Technically, the price action signaled an overbought situation, but a larger correction is far from being confirmed.
XAU/USD is struggling to stay higher as the Eurozone, German, French, and UK manufacturing and services sectors remained in the contraction territory. Still, the price of gold could drop deeper if the Dollar Index rallies after the US Flash Services PMI and Flash Manufacturing PMI came in better than expected, confirming expansion.
Gold: Exhausted Buyers!
From the technical point of view, XAU/USD registered only a false breakout through the 1,987 historical level signaling exhausted buyers.
Now, it has dropped below the uptrend line (downside obstacle), but it has failed to stay below the weekly pivot point of 1,962 indicating that the buyers are still in the game. The minor downtrend line represents an upside obstacle.
XAU/USD Forecast!
A new lower low, a bearish closure below 1,953 activates a deeper drop and is seen as a selling signal. The downside scenario could be invalidated if the rate makes a valid breakout above the downtrend line.
