Gold increased in the morning as was almost to reach a dynamic resistance, but it has lost altitude in the second part of the day as the USDX has deleted the morning losses. The yellow metal shows some exhaustion signs on the Daily chart and is somehow expected to drop in the upcoming period. The rate will drop in the upcoming weeks, but only if the USDX will resume the minor rebound.

It is premature to talk about a larger drop at this moment because the yellow metal is located above a strong dynamic support. Gold could develop a minor chart pattern, which could signal a reversal on the short term.

The USDX has decreased a little again in the last hours as the US New Home Sales have disappointed earlier, the indicator was reported at 593K in January, lower versus the 655K estimate and versus the 643K in the former reading period.

You can see that the dollar index has come back down to retest the lower median line (lml) of the descending pitchfork. The USDX will become strongly bullish if will have enough energy to close and stabilize above the sliding line (sl) of the dark blue ascending pitchfork. A valid breakdown below the LML will send the rate below the lower median line (lml) of the ascending pitchfork.

You can see that the rate has failed to close above the sliding line (sl) of the descending pitchfork signaling a potential drop. The rate has come down but has failed to reach and retest the upper median line (uml) of the red descending pitchfork. It could come to test and retest the WL1 and the outside the sliding line (sl) before will drop further.

The failure to stabilize above the WL1 could send the rate towards the WL2 in the upcoming period, a larger increase is less likely to happen right now, only the fundamental factors could send it towards fresh new highs.