The lower-than-expected US advance GDP data appears to have dampened the mood on the greenback and allowed spot metals to take the shine. Gold price on the XAU/USD chart has been a beneficiary of this situation, as it currently trades 1.06% higher to snatch back all it lost on Wednesday and some.
The advance GDP reading was at 4.0%, which was less than the 4.2% that the markets had expected. This led to accelerated selling on the US Dollar and triggered a swift upside move in the last two hours. However, gold price could see its upside limited as it faces stiff resistance at $1869, as well as a chart pattern that has bearish implications for the asset pairing.
Technical Levels to Watch
Today’s muted upside move on the XAU/USD daily chart sets up a consolidation area within the larger descending channel. This formation is a bearish flag, which has bearish implications for price action despite today’s upsurge.
The daily candle looks set to test resistance at the 1869.39 price level, which intersects the upper edge of the large descending channel. A break of this area targets 1881.99, which is where the flag’s upper border lies. Only a break of this area and price advance towards 1900.76 negates the flag and opens the door for further upside towards 1918.68, with 1940.15 and 1954.77 serving as potential targets to the north.
On the flip side, rejection at 1881.99 or 1869.39 sets up a run to the south, towards the flag’s lower border. This move has to take out 1850.78 along the way. A breakdown of the flag opens the door for a projected measured move towards 1748.80. This move has to take out 1821.55, 1800.34, 1788.90 and 1762.51 along the way.
XAU/USD Daily Chart