Meanwhile, from a technical analysis perspective the decline has its own reasons and could have been forecast. Namely, the initial drop occurred due to the price failing to pass the resistance zone above the 1,800.00 mark.
Economic Calendar Analysis
On Wednesday, the top event of all macroeconomic events will occur. The US Federal Reserve Federal Open Market Committee is going to publish their Economic Projections, Statement and the Federal Funds Rate.
On Thursday, Markit Institute will publish their Purchasing Managers Indexes. The indexes are a result of survey of manufacturing and services sector managers about their outlook on their respective fields.
Also on Wednesday, at 12:30 GMT, the weekly US Unemployment Claims could cause minor increases of volatility. However, for example, the range for the EUR/USD moves during the release has been from 5.4 to 11.1 base points. On average, the EUR/USD moves less than 10 points on its own, during no event environment.
The week's notable events will end with the US Markit PMI release. Namely, the US Flash Manufacturing and Services PMIs at 13:45 GMT are highly likely to cause USD moves.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
XAU/USD short-term forecast
Afterwards, after a period of sideways trading below the 55 and 100-hour SMAs, the bullion confirmed the 55-hour SMA as resistance and bounced off it. This resulted in a decline, which was slowed down for three hours by the support zone at 1,781.00/1,784.00. However, the support zone failed due to the a lot better than forecast US Retail Sales strengthening the US Dollar. This resulted in the steep drop to the 1,745.50 level. Note that round price levels failed to slow down the decline.
By the middle of Friday's European trading hours, the yellow metal's price had recovered above 1,765.00.
If the recovery of the metal continues on, the price could reach for the resistance of the hourly simple moving averages near the 1,780.00/1,790.00. On the other hand, a decline of the price would most likely once again look for support in the 1,750.00 level and the 1,745.50 mark.
XAU/USD daily charts review
On the daily candle chart, the drop of the yellow metal can be more clearly observed. Meanwhile, note that the bullion has been in a decline since the start of September, when it bounced off the summer high zone at 1,830.00.Daily Candle Chart
Long sentiment grows
On Friday, the sentiment on the Swiss Foreign Exchange was 63% bullish, as 64% of open position volume was in long positions.
On Thursday, the bullish traders took over, as short positons were closed. Namely, 57% of open position volume was long.
Meanwhile, in the 1000-pip range around the metal's price pending trade orders were 69% to buy the precious metal.