Gold is trading at 1,705 level and most likely will hit the $1,700 psychological level if the USDX continues to increase in the short term. The yellow metal drops after registering a new lower low.
The outlook is bearish despite the most recent temporary rebound. The price has come back higher to test and retest some near-term resistance before resuming its downwards movement.
The price of gold may extend its sell-off if the US data comes in line with expectations or better during the week. Also, the risk-on sentiment dominates the markets, so XAU/USD may approach and reach fresh new lows.
XAU/USD Drops As Expected!
The price plunged through 1,719 static support and now is located below the S2 (1,708) level. Stabilizing below this level signals a further decline in the short term.
Technically, the price should drop after escaping from the minor narrow range. Its failure to stabilize above the Pivot Point (1,733) or to come back towards 1,747 signaled a downside breakout.
Forecast & Tips!
The current breakdown, drop, under the S2 (1,708) is seen as a selling opportunity. You can use the S3 (1,695) and the S4 (1,682) as downside targets.
The Stop Loss could be hidden above 1,736 former high. The bias remains bearish as long as the price is located under 1,719.
The material has been provided by InstaForex Company - www.instaforex.com