The yellow metal dropped and seems too heavy to be stopped on the short term. It remains to see how long the corrective phase will be because the USDX is expected to increase further in the upcoming period.

The Gold continues to move sideways on the Daily chart, so only a breakout will show us the next significant move. Price is attracted by a very strong dynamic support. It should take this out if the dollar index will force the USD  to climb much higher in the upcoming days and in the upcoming weeks.

The Aussie and Kiwi plunged versus the USD today and have forced the yellow metal to drop as well. The Australian Mi Inflation gauge increased by 0.5%, more versus the 0.1% growth in the former reading period, the Private Sector Credit rose by 0.5%, more versus the 0.4% estimate, while the HIA New Home Sales dropped by 2.0%, versus a 0.7% drop in the former reading period. The New Zealand ANZ Business Confidence dropped to -23.4, from -20.0 points. The Chinese Manufacturing PMI dropped from 51.5 to 51.4 points, it has come in better versus the 51.3 estimate, while the Non-Manufacturing PMI increased from 54.6 to 54.8 points, but the Aussie wasn’t impressed and has continued to drop.

Some positive numbers from the US will force the gold to drop further in the upcoming hours. You can see that the rate has managed to increase a little only because the USDX has dropped aggressively in the Friday’s US session.

The next downside target will be at the second warning line (WL2) of the former ascending pitchfork. Support can be found also at the upper median line (uml) of the red descending pitchfork. The 1306 level could stop the rate as well. A breakdown below the mentioned support levels will signal a larger drop in the upcoming period.