The yellow metal continues to stay higher, even though the USD appreciated versus its rivals. As you already know, the US Flash Manufacturing PMI and Flash Services PMI came in better than expected yesterday, but XAU/USD remains under upside pressure as the Eurozone and UK manufacturing and services sectors confirmed contraction again. Technically, the price action signaled exhausted buyers, but a corrective phase is far from being confirmed.

Today, the Australian CPI q/q and CPI y/y reported higher-than-expected inflation. Furthermore, the BOC left the monetary policy unchanged. Tomorrow, the ECB should really shake the price.

Gold Overbought?

As you can see on the H1 chart, XAU/USD dropped below the uptrend line signaling an overbought situation. Now, it has tested and retested this dynamic resistance. The 1,987 historical level represents a key upside obstacle.

As long as it stays below these immediate resistance levels, XAU/USD could drop again.

XAU/USD Outlook!

A bearish closure below the pivot point of 1,962 is seen as a selling signal.

A valid breakout through 1,987 and through the uptrend line could announce an upside continuation.