FX.co ★ Gold: leg higher paused, more declines below 1,978

The price of gold crashed after reaching the 1,993 high today. Now, it's trading at 1,982 at the time of writing and it seems heavy. Still, a deeper drop is far from being confirmed. The bias remains bullish as the Dollar Index is bearish.

Fundamentally, the US reported positive data today. The Housing Starts came in at 1.37M versus 1.35M expected, while Building Permits jumped from 1.47M to 1.49M even if the traders expected a potential drop to 1.45M.

XAU/USD Rising Wedge!

Technically, XAU/USD failed to stay above the historical level of 1,988 and now it has turned to the downside. Its failure to retest the Rising Wedge's resistance announced exhausted buyers.

Now, it has reached 1,978 static support. As long as it stays above this downside obstacle and above the uptrend line, the yellow metal could resume its growth.

XAU/USD Forecast!

Testing and retesting 1,978 and the uptrend line, registering false breakdowns may announce a new bullish momentum. Jumping above 1,988 may announce further growth.

Dropping and closing below 1,978 activates more declines and is seen as a selling opportunity as the rate could drop also below the uptrend line.