Gold was trading in the red at the time of writing. It was trading at 1,832 above 1,830 today's low. The price action signaled that the buyers are exhausted and that the sellers could take full control again.

Fundamentally, the yellow metal was moved by the manufacturing and services data and by the Canadian inflation figures. The Canadian CPI reported a 0.5% growth versus the 0.7% growth expected. The Eurozone and German Flash Services PMI came in better than expected, while Flash Manufacturing PMI came in worse than expected. Furthermore, the UK Flash Services PMI and Flash Manufacturing PMI came in better than expected.

XAU/USD rallied before the US economic data. Still, the Flash Services PMI came in at 50.5 points versus 47.3 expected signaling expansion, while Flash Manufacturing PMI came in at 47.8 points above 47.4 expected. USD rallied after the US data dump, that's why the price of gold dropped again.

XAU/USD upside invalidated

XAU/USD challenged the downtrend line, but it has failed to stay above it. It has registered only false breakouts, and now it has turned to the downside again. As long as it stays within the channel's pattern, the rate could approach and reach new lows.

The false breakout with great separation signals downside pressure. The 1,831 stands as a downside obstacle.

XAU/USD outlook

A bearish closure below 1,831 activates more declines. This is seen as a new selling signal. The weekly S1 (1,817) represents a potential downside target.