FX.co ★ Gold approaches 1,720 critical support

Gold crashed in the last hour as the USD was boosted by the US economic data. XAU/USD was trading at 1,722 at the time of writing and it seems unstoppable. As you already know, the yellow maintained a bearish bias despite temporary rebounds.

Fundamentally, the XAU/USD plunged as the US CB Consumer Confidence and the JOLTS Job Openings came in better than expected earlier today. Tomorrow, the US ADP Non-Farm Employment Change could bring high action. Furthermore, the ISM Manufacturing PMI on Thursday and the NFP, Unemployment Rate, and Average Hourly Earnings on Friday could be decisive.

XAU/USD Massive Drop!

As you can see on the h1 chart, XAU/USD failed to retest the downtrend line signaling strong downside pressure. Now, it has reached the weekly S1 (1,722) downside obstacle. After its massive drop, we cannot exclude a temporary rebound.

Gold could come back to test and retest the 1,727 level before extending its downside movement. As long as it stays under the downtrend line, the bias remains bearish.

XAU/USD Outlook!

Staying below 1,727 and under the downtrend line and making a valid breakdown below 1,720 could activate more declines and could help the sellers to go short with a potential downside target at the S2 (1,706).