Gold Price Lacking Follow-through, Focus on US Data Ahead

On May 26, 2023

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The bias remains bearish despite temporary rebounds.
Dropping again below the median line (ML) activates more declines.
The US data could bring more action today.

The gold price is trading in the red at $1,952 at the time of writing. The metal has rebounded after reaching a new low of $1,936 yesterday.

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After its massive drop, a corrective upside was due to a broad bearish trend. The XAU/USD bounce back can be short-lived, with the key focus on the US data ahead.

Gold plunged in the last trading session as the Prelim GDP reported a 1.3% growth exceeding the 1.1% growth estimated. Unemployment Claims came in at 229K in the last week compared to 249K forecasts, while Prelim GDP Price Index surged by 4.2%, beating the 4.0% growth expected.

Today, the US Core PCE Price Index may report a 0.3% growth, Durable Goods Orders are expected to register a 1.0% drop, while Core Durable Goods Orders could increase by 0.0%.

Furthermore, the Revised UoM Consumer Sentiment, Goods Trade Balance, Personal Income, Personal Spending, Prelim Wholesale Inventories, and Revised UoM Inflation Expectations data will also be released. Better-than-expected data could boost the USD and push the XAU/USD down.

Gold price technical analysis: Bearish pattern violated

The XAU/USD has rebounded to retest the immediate resistance levels. As you can see on the hourly chart, gold escaped from the range pattern between $1,984 and $1,952 levels signaling a deeper drop.

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The precious metal has dropped below the median line (ML) and under the weekly S1 (1,945) downside obstacles, but it has failed to stay there, showing an oversold condition.

The $1,965 represents a stiff resistance. We have a strong liquidity zone below this resistance level. The price could turn to the downside after reaching the supply zone. Returning below the median line (ML) and making a new lower low can activate more declines.

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Olimpiu Tuns

Olimpiu Tuns graduated with a Master in Business Administration and is a seasoned Market Analyst / Trader / Trainer with 10 years of experience in the financial markets having expertise in Forex, Commodities, Index, Cryptocurrencies, and Stocks. He worked as a Market Analyst for three major brokerage companies, as a prop trader, and as a contributor/content creator for news portals and educational platforms.

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