The sharp decline of the metal's price was expected to consolidate by trading sideways or retracing back up on Thursday.
Economic Calendar Analysis
On Thursday, the ISM Manufacturing PMI will be published at 14:00 GMT.
On Friday, the US employment data will be published. It will consist of the US Average Hourly Earnings, Non-Farm Employment Change and the official Unemployment Rate.
XAU/USD short-term forecast
Yesterday, the price for gold dropped sharply to the psychological level at 1,405.00. During today's morning, the XAU/USD exchange rate was trading near the given level.
On the one hand, gold could reverse north and remain to appreciate against the US Dollar. In this case, the rate has to surpass the monthly PP located at the 1,416.20 mark.
On the other hand, the exchange rate could trade sideways within the 1,405.00/1,410.00 area in the nearest future. It is unlikely, that bears could prevail in the nearest future, and gold could surpass the psychological level at 1,400.00.
Hourly Chart
On the daily chart, the commodity price remains near the high levels, which it reached a couple of weeks ago.
In the meantime, all of the Dukascopy used daily simple moving averages were located far below the commodity price indicating that it is still overbought.
Daily Chart
Short sentiment decreases
Since Tuesday, 67% of open gold position volume on the Swiss Foreign Exchange was in short positions.
The sentiment changed on Thursday, as 63% of volume was in short positions. Some traders had taken profit from short positions.
Meanwhile, in the 1000 base point range around the current metal's price the orders were bullish - 56% were set to buy, and 44% of orders were set to sell.