Gold prices have increased volatility on Thursday by suddenly dropping and then getting back up. However, that is not the most important thing to note on the charts.
The metal has revealed a descending pattern channel. The fluctuations occurred exactly in its borders. This signals that a decline is set to occur in the medium term.
The only notable event during this week will be the Canadian Employment data release on Friday at 13:30 GMT.
The event is scheduled to be covered by Dukascopy Analytics on our Dukascopy Webinars YouTube channel. The stream starts ten minutes before the data release.
For more detailed info and a chance to ask questions watch the weekly calendar analysis by clicking on the link below.
XAU/USD short term forecast
During the previous trading session, the resistance of the 200-hour simple moving average forced the yellow metal to pass through the support level of the monthly pivot point at 1,308.46. On Thursday morning, the gold was located below the monthly PP at the 1,306.77 mark.
In regards to the near-term future, most likely, the resistance of the monthly pivot point will retrace the rate to push the yellow metal to trade sideways at the 1,300.00 level for the rest of the day.
Meanwhile, the 55-hour and the 200-hour simple moving averages are trying to catch up the rate to give further retracement to the rate on Friday.
Hourly Chart
On the daily chart traders can observe the breaking of dominant patterns. The break was caused by fundamental changes in the US Dollar's value.Namely, last week the Federal Reserve announced that the US monetary policy will not be as tight as previously expected.
This revealed that the USD will be more available in the financial markets, and it caused a fall of its value. Due to that reason gold prices surged above the resistance levels.
Daily Chart
Traders decrease short sentiment
Since Monday 73% of trader open positions were short. On Thursday the situation changed, as 69% of open positions were short.
In the meantime, trader pending orders in the 1000-base point range were near the neutral zone. 53% of orders were to buy the metal.