Gold to recover

Gold failed to resume its sell-off in the short term. It has rebounded and retested the near-term upside obstacles before dropping deeper. XAU/USD was trading at 1,818 at the time of writing. In the short term, gold bounced back as USD depreciated a little versus the other major currencies.

Today, the XAU/USD is moved by fundamentals. The price dropped even if the US retail sales came in worse than expected. The reason why gold is declining is that the Federal Reserve is expected to increase its Federal Funds Rate by 50 bps today. The Fed may continue hiking rates in the next monetary policy meetings. More hawkish than expected Fed could send XAU/USD down.

You know from my previous analysis that XAU/USD is bearish. It could resume its downside movement after retesting 1,828 and after dropping and closing below the 1,812 level. Unfortunately, the price failed to stabilize under 1,812 signaling exhausted sellers.

It rebounded and almost reached 1,837. As you can see, it registered only a false breakout through 1,828 indicating that the sellers are still in the game.

As long as it stays under the 1,828 key resistance, gold could drop deeper again. Its false breakout above 1,828 signaled that the rebound ended and announce a new sell-off. This was seen as a new short opportunity.

1,812 stands as the first downside target. Dropping and stabilizing below it may activate more declines to the 1,800 psychological level and down to 1,786.