Gold rallied at the moment of writing as the US dollar index dropped aggressively after the US inflation data. The yellow metal was somehow expected to increase after its most recent sell-off.
The price of gold has printed a major pin bar which signals a potential growth in the short term. The US inflation data has come in mixed earlier. The USD decline helped the XAU/USD bulls to step into the game again.
Technically, it's still risky to go long on gold. We could search for new long entries after gold ends its current sideways movement. The US is to release its PPI, Core PPI, and the Unemployment Claims tomorrow. These economic reports may have an important impact on the XAU/USD.
XAU/USD Natural Rebound!
Technically, a false breakout with great separation below the upper median line (UML) at 1,700 and through the weekly S2 (1,711.64) signaled that gold could turn to the upside in the short term.
Now the price is testing the psychological level of 1,750. Jumping and stabilizing above 1,752.72 immediate high could signal a potential strong growth in the short term. Personally, I would like to see a strong consolidation here before gold jumps higher.
Trading Conclusion
Gold has found support around 78.6 retracement level, so it could come back higher as long as it stays above it. The near-term major target is seen at the warning line (WL1). In the short term, we cannot exclude a new drop. XAU/USD is likely to come back down to test and retest some support levels before jumping higher.