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FX.co ★ Gold edges higher as dollar index drops

Gold edges higher as dollar index drops

Gold rallied after the Dollar Index has resumed its downside movement. Personally, I'm using a correlation between DXY and XAU/USD. When the Dollar Index increases, I'm looking for shorts in Gold, and while the index drops, the price of gold could increase.

Gold is used as a hedge for inflation. The US inflation figures have come in worse than expected. Still, the yellow metal increase as the DXY has reached a new low today. XAU/USD stands at the 1,804 level and is fighting hard to climb higher. It has found strong support on a dynamic downside obstacle.

XAU/USD Turned To The Upside!

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Gold edges higher as dollar index drops

XAU/USD registered only false breakdowns through the first warning line (WL1) of a major descending pitchfork. Now it's traded above 1,800.09 weekly pivot point. Stabilizing above this level after registering a false breakdown with great separation below WL1 could indicate more gains.

1,823 - 1,834 zone represents a resistance area. It remains to see how it will react in the coming hours. Right now is pressuring 1,803.92 former high. Closing above it is seen as a bullish signal.

Outlook!

Gold could resume its upside journey if the rate closes and stabilizes above 1,803.92. Still, only a new higher high, climbing above 1,834.04 could really validate a larger growth towards the 1,900 psychological level.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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