Gold rebounded in the short term and now is trading at 1,788. It has turned to the upside trying to recover after its massive drop. It could try to test and retest the immediate resistance levels before turning to the downside.
Fundamentally, a larger rebound could be natural after the US reported worse than expected data. The Flash Services PMI came in at 44.4 versus 46.5 expected and compared to 46.2 in the previous reporting period, while Flash Manufacturing PMI dropped from 47.7 points to 46.2 points confirming further contraction.
XAU/USD Temporary Rebound?
Technically, the rate found support at 1,773 and now it has rebounded. It has retested the uptrend line and the weekly pivot point of 1,791. As long as it stays under these levels and below the downtrend line, the bias is bearish in the short term.
Testing and retesting the resistance levels, registering only false breakouts may announce a new sell-off. The downside scenario could be invalidated only if the rate makes a valid breakout above the downtrend line and above 1,796.
XAU/USD Forecast!False breakouts through the upside obstacles could announce a new sell-off at least towards 1,773. This is the first short opportunity. A larger drop and a new short signal could appear after dropping and closing below 1,773.