FX.co ★ Gold extending sell-off as USD rallying

The price of gold is dropping like a rock in the short term as the US Dollar dominates the currency market. Despite the war in Ukraine and the COVID-19 outbreak, the yellow metal lost altitude. XAU/USD has taken out major support levels, so a further drop is in the cards.

Fundamentally, the BOJ left its monetary policy unchanged today. Later, the US data could really shake the markets. The Advance GDP is expected to report a 1.1% growth, Advance GDP Price Index could register a 7.2% growth, while the Unemployment Claims indicator could drop from 184K to 178K in the last week.

XAU/USD Ignored The Downside Obstacles!

XAU/USD resumed its sell-off after failing to reach and retest the median line (ML) of the descending pitchfork. As you can see on the H4 chart, it has ignored the 1,890 and the 1,877 static support levels.

As long as it stays under the downtrend line, the bias remains bearish, so the yellow metal could drop deeper anytime. Technically, 1,877 stands as a key level, a valid breakdown could confirm a further drop.

XAU/USD Forecast!

Closing below the 1,877 key level, testing, and retesting this level could signal more declines. This scenario could bring new selling opportunities.

False breakdowns below 1,877 could signal a new rebound in the short term. A minor bounce back could bring short opportunities from around the downtrend line.