FX.co ★ Gold: attention at support

The price of gold dropped in the early morning and is almost to reach dynamic support. It's trading at 1,877 at the time of writing. The pressure remains high as the Dollar Index erased its minor losses.

Fundamentally, XAU/USD dropped after mixed US data was reported on Friday. The Non-Farm Employment Change was reported at 428K above 390K expected, the Unemployment Rate remained steady at 3.6%, while the Average Hourly Earnings rose by 0.3% less compared to 0.4% estimates.

On Wednesday, the US is to release its inflation data. The CPI and the Core CPI are seen as high-impact events. XAU/USD could register sharp movements around these figures, that's why you have to be careful.

XAU/USD Under Pressure!

Gold retested the 23.6% Fibonacci level (1,885) and now is almost to reach the ascending pitchfork's lower median line (LML) which stands as a dynamic support. You can see that the price was rejected by this line in the past.

It remains to see how it will react here around this level. A valid breakdown may signal more declines, while a false breakdown, a bullish pattern could announce a new bullish momentum.

XAU/USD Outlook!

In the short term, the price of Gold could still grow as long as it stays above the lower median line (LML). Jumping and stabilizing above 23.6% (1,885) could signal a potential growth up to 38.2% (1,907).

On the other hand, a valid breakdown below the lower median line (LML) could activate a deeper drop towards S1 (1,852)