GOLD Seems Vulnerable To Slide Further

GOLD is trading in the red and it continues to pressure a major support area. A breakdown is imminent as long as the rate stays near the downside obstacles. USD temporary rebound helped the sellers to step in again and to force the gold price to stabilize far below the $1,900 level.

It is premature to talk about a larger drop as long as the price stays above the critical support area and as long as USDX stays lower. The US is to release its inflation figures later, so better than expected data could send gold into agony.

XAU/USD could increase again in the short-term, but the selling pressure remains high as the price continues to trade near the lower median line (lml) of the ascending pitchfork. It has found temporary support around the $1,862 level again.

Technically, a valid breakdown through this support level and below the lower median line (lml) signals a deeper drop. A temporary rebound could develop, but I believe that the upside is limited after its failure to stabilize above the median line (ml).

Gold has registered another false breakdown below the $1,862 static support and under the lower median line (lml), but this is not a reversal pattern or a strong bullish signal. I told you yesterday that only a major Pin Bar or Bullish Engulfing could suggest buying.

We'll have a great selling opportunity if the price drops and closes under the $1,848 static support with a downside target at the $1,800 psychological level.