Gold rallied aggressively in the last weeks and reached new highs as the USD  plunged most of its rivals. The yellow metal has taken advantage of the weak dollar and has rebounded. Technically, it was somehow expected to climb higher after the failure to reach a potential dynamic support.

The rate has found temporary resistance on the Daily chart right below some crucial resistance levels, but we’ll see what will happen in the upcoming days because is very important to see what will happen on the USDX, which is trading right above a critical support level. Gold could still increase in the upcoming days because it could be attracted by a confluence area.

Gold price dropped today, but has squeezed in the last hours as the United States data have failed to impress earlier. The Non-Farm Employment Change was reported at 148K, much below the 190K estimate and versus the 252K in the former reading period, the Average Hourly Earnings rose only by 0.3%, matching expectations, while the Unemployment Rate remains steady at 4.1% for the third month in December.

Unfortunately for the USD, the ISM Non-Manufacturing PMI dropped from 57.4 to 55.9 points, even if the traders have expected to see an increase to 57.6 points, while the Trade Balance has come in worse than expected, it was reported at -50.5B, much below the -49.7B estimate and below the -48.9B in the former reading period.

You can see that it was almost to hit the first warning line (WL1) of the former ascending pitchfork, it could still reach this in the upcoming week if the USD will slip lower versus its rivals. Gold could reach the confluence area formed between the WL1 and the upper median line (uml) of the descending pitchfork, a valid breakout above this level will accelerate the upside movement. Only a failure to touch the mentioned resistance levels and the confluence area will signal a serious overbought and a potential drop.