Gold is vulnerable and it could lose its major and critical support area. A valid breakdown below it and a new lower low suggests a larger corrective phase. The yellow metal dropped from the $1,965 level to the $1,850 level in yesterday's session after the rumors that we may have a COVID-19 vaccine soon.
This situation has changed the sentiment, USD has managed to rebound and to recover against its rivals. XAU/USD could be weakened by a USDX's sharp growth in the upcoming period. The dollar index has decreased due to the US presidential election, but it is still located above a major support area, so another leg higher could push Gold down.
GOLD Erased Its Latest Gains!XAU/USD has bounced back after reaching the $1,850 psychological level and now it is trading above the $1,862 static support and above the lower median line (lml) of the ascending pitchfork.
In yesterday's analysis, I mentioned that the outlook remains bullish as long as the price stays above the median line (ml). Since the rate plunged far under the median line, XAU/USD could develop a broader range if it makes a bearish closure below the $1,848 level.
The price has failed to stabilize above the median line (ml) after the rumors that a vaccine is almost ready. So, a downside breakout from this pitchfork is favored.
GOLD Trading TipsSell XAU/USD if the price drops and closes under the $1,848 static support. You can use the $1,800 and the $1,744 levels as near-term downside targets.
Gold could register only a temporary rebound after yesterday's massive drop, bearish engulfing, so buying at this moment is risky. I believe that only a major reversal pattern on the support area of $1,862 - $1,848 could suggest buying. A pin bar, false breakdown with great separation, or a major bullish engulfing could create a buying opportunity.