Gold resumed its drop after the FOMC. It stands deep in the seller's territory, so the further drop is favored. The yellow metal is under pressure as the Dollar Index continues to stay near a dynamic resistance.
DXY's further drop may signal that the greenback could appreciate versus its rivals. This scenario could really push the price of Gold down. Gold cold starts increasing again only if the risk-off sentiment dominates the market in the coming period due to COVID-19 risk.
If USD appreciates versus the other currencies, personally, I don't want to be long in Gold. XAU/USD stands in a support zone, so I'll wait for confirmation before taking action.
XAU/USD Attention At Support!
Gold dropped as low as 1,737.84 level where it found support. Now is has increased a little to pressure the 1,750.46 broken support. It has failed to reach and retest the ascending pitchfork's median line (ml) signaling strong pressure.
Personally, I've drawn a minor ascending pitchfork trying to understand better the price action. XAU/USD has retested the ascending pitchfork's lower median line which stands as a dynamic support.
XAU/USD Forecast!
Gold price could extend its downside movement if it makes a new lower low, to drop and close below 1,742.31. Stabilizign below the major ascending pitchfork's median line (ml) and registering a new lower low, XAU/USD could develop a downside move towards the lower median line (lml).
Gold could invalidate the bearish scenario only if it makes a valid breakout through the downtrend line.
The material has been provided by InstaForex Company - www.instaforex.com