Our gold forecast notes that the yellow metal plunged after failing to make a valid breakout above 1868.62 static resistance. XAU dropped as the US Dollar has registered a strong appreciation versus its rivals. DXY’s further growth could force the XAU/USD to drop deeper in the short term.

Still, technically, after the current sell-off, the price of gold could try to rebound. Gold is traded at 1780.81 at the time of writing and is almost to reach a dynamic support, a downside obstacle that could stop the bearish momentum.

Today, the US economic data came in mixed, it remains to see how the Dollar Index will react after today’s strong rally. The Prelim GDP reported a 2.1% growth in Q3 versus 2.2% expected and compared to 2.0% in Q2, while the Core PCE Price Index registered a 0.4% growth matching expectations. As long as the USD is bullish, Gold could approach and reach new lows.

USD received a helping hand from the Unemployment Claims indicator which registered an unexpected drop from 270K to 199K in the previous week, far below 259K expected, while the Revised UoM Consumer Sentiment climbed from 66.8 to 67.4 points, even if the specialists have expected the indicator to remain steady at 66.8 points. 

Furthermore, the Goods Trade Balance, Prelim GDP Price Index, Personal Income, and the Personal Spending have come in better than expected as well.

Gold Forecast: Price Technical Analysis – Confluence Area

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XAU/USD could hit the descending pitchfork’s median line (ML) which could represent a dynamic support. Also, the uptrend line could stop the downside movement. The confluence area formed at the intersection between these dynamic support levels could bring new opportunities if the rate reaches it.

From the technical point of view, Gold is traded above a demand zone. So, a bullish pattern here could signal a new leg higher.

This scenario could take shape if the Dollar Index retreats after its amazing rally. In the short term, we cannot exclude a temporary correction registered by the DXY.

The index could be too overbought to be able to climb higher. Later today, the FOMC Meeting Minutes could be decisive. A dovish report could boost the XAU/USD.