The price of gold rallied in the short term. Now it is trading at the 1,789 level at the time of writing. The yellow metal is strongly bullish, so further growth is favored. Still, it remains to see how it will react after reaching major resistance.
Fundamentally, the BOE brought high action into the markets today. As you already know, the Bank of England increased the Official Bank Rate from 1.25% to 1.75% as expected. In addition, the US data came in mixed, the Unemployment Claims came in at 260K below 262K expected, while the Trade Balance was reported at -79.6B versus -80.5B estimated. Tomorrow, the NFP, Average Hourly Earnings, and the Unemployment Rate could really shake the markets.
XAU/USD Strong Buyers!
XAU/USD challenges the 1,788 former high which represents an upside obstacle. The weekly R1 of 1,785 is still a resistance even if the rate jumped above it. The breakout could still be invalidated.
Failing to reach and retest the uptrend line signaled strong buyers and a potential rally. It has also failed to retest the 1,749 - 1,752 area indicating that the sell-off could be over around 1,755.
A valid breakout above 1,788 and a bullish closure above the 1,790 today's high could activate further growth and could bring new long opportunities. The 1,805 is seen as a major upside target.
False breakouts above the 1,788 and coming back below the R1 could announce a new sell-off.