Gold seems undecided after the Thursday’s impressive rally but is still premature to talk about a larger increase as long as the rate is trading below some very, very important resistance levels. The yellow metal has increased as the USDX has plunged in the yesterday’s trading session and has pushed the USD down.

It is very important to see what will really happen on the USDX in the upcoming days because if the index will resume the downside movement, then the yellow metal will jump much higher.

Gold has managed to come back above the inside sliding line (sl1), above the downside 50% Fibonacci line of the ascending pitchfork and above the upper median line (uml) of the descending pitchfork. Price is still trapped below the first warning line (WL1) of the major ascending pitchfork and below the inside sliding line (sl2) which it represents a very strong and important dynamic resistance.

Personally, I believe that only a valid breakout above the sliding line (sl2) will really signal a further increase and the next major upside target could be at the median line (ml). You can see that the rate was rejected by the WL1 in the previous weeks, so another false breakout or a failure to reach it could signal a potential drop.

It could increase after the failure to stay below the upper median line (uml) below the 50% line and most important below the inside sliding line (sl1).

Gold will increase and will reach new highs only if the USDX will drop and it will force the dollar to lose more ground versus the other major currencies. You should keep an eye on the economic calendar in the upcoming week because the fundamental factors will have a big influence.