The yellow metal's price has gradually recovered and reached the 1,860.60 level. At that level the pair encountered the resistance of the 55-hour simple moving average and a 23.60% Fibonacci retracement level.
Future scenarios were based upon whether or not the resistance level holds.
During the week there will be minor data sets published, which could cause initial reactions. Traders with close by tight stop losses should take into account the times of the macroeconomic data releases.
On Wednesday, the United States Bureau of Labor Statistics is set to publish the Consumer Price Index and Core Price Index at 13:30 GMT.
Afterwards, at 13:30 GMT, expect the weekly US Unemployment Claims.
The week will end with the publication of the US Retail Sales and US Core Retail Sales at 13:30 GMT. In November and December, these data sets caused an increase of volatility above the average.
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
Since Tuesday morning, the XAU/USD exchange rate pierced the resistance level formed by the 55-hour SMA and the Fibo 23.60% near 1,860.00.
From the one hand, it is likely that yellow metal could extend gains the US Dollar in the short term. In this case the rate would have to exceed the resistance area formed by the 100– and 200-hour SMAs in the 1,888.40/1,900.90 range.
From the other hand, some downside potential could prevail in the market within the following trading session. In this case the price for gold could tumble below the psychological level at 1,820.00.
Hourly Chart
On the daily candle chart, the metal's decline passed the support of the 55-day SMA and pierced the 200-day simple moving average. Moreover, the 38.20% Fibonacci retracement level at 1,837.43 was passed on Friday and Monday. Due to that reason it is not expected that these levels would hold.
The metal has no additional technical support on the daily candle chart, as low as the 50.00% Fibo at 1,763.74. This level provided the price with support at the end of November, when the December surge started.
Daily Candle Chart
Traders remain long
On Monday, the sentiment on the Swiss Foreign Exchange was 56% bullish, as 56% of open position volume was long.
On Tuesday, 57% of open position volume was long.
Meanwhile, in the 1000-pip range around the metal's price the pending orders were 85% to buy the metal.
Previously, the orders were 74% to buy. The close by orders could be the stop losses of the long positions and open to go long positions.