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The price of gold plunged in the short term after reaching the 1,959 - 1,965 resistance area. Now, it has reached the 1,895 lower low which stands as a downside obstacle. At the time of writing, XAU/USD is trading at the 1,912 level far above 1,890 today's low.
In the short term, the price of gold dropped as diplomatic solutions were expected to end the geopolitical tensions. XAU/USD dropped also because the Dollar Index registered a strong growth until yesterday. Gold rebounded in the last hours but the bearish pressure remains high as the US JOLTS Job Openings and the CB Consumer Confidence came in better than expected.
XAU/USD extended its sell-off after escaping from the up-channel pattern. Its valid breakdown below the weekly S1 (1,923) signaled a deeper drop. Now, it has found strong demand on the 1,895 former low.
Staying above this level may signal potential sideways movement. In the short term, after its amazing sell-off, the price of gold is somehow expected to rebound. Only a new lower low, a valid breakdown below 1,895 may activate a larger downside movement.
In the short term, it's trapped between the 1,895 and 1,965 levels. Escaping from this range could bring new trading opportunities. False breakdowns below 1,895 or a strong bullish pattern could announce a new leg higher towards 1,965.
Only a temporary rebound, testing, and retesting of the weekly S1 (1,923) could announce a new sell-off. The XAU/USD could register a larger drop if it makes a new lower low, if it slips and closes below 1.890.
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