Gold drops right now and is pressuring an important confluence area, a valid breakdown will confirm a further drop, actually a breakdown will accelerate the sell-off.  However, it is premature to talk about a larger drop right now as long as the USDX is located below some very important dynamic resistance. The yellow metal is still expected to climb much higher in the upcoming period despite the minor drop.

A minor retreat was expected and it was natural after the impressive rally, right now is pressuring an important confluence area, a rejection from here will signal a further increase. Price has come down to test and retest the broken resistance levels.

Gold dropped significantly today also because the AUD/USD plunged aggressively despite the mixed Australian data. The Building Approvals dropped much more than expected, by 20.0%, more versus the 7.9% estimate and after the 12.6% growth in the former reading period, the AIG Manufacturing Index increased from 56.2 to 58.7, while the Import Prices rose by 2.0%, beating the 1.5% estimate, the indicator has increased significantly after the 1.6% drop in the former reading period. The Commodity Prices dropped by 0.6%, while the Chinese Caixin Manufacturing PMI remained steady at 51.5 points.

The has is pressuring the confluence area formed between the first warning line (WL1) of the ascending pitchfork with the descending sliding parallel line (sl) of the former descending red pitchfork. We’ll see what will happen in the upcoming hours and days, a false breakdown followed by a minor increase will signal an increase at least till the 1366 former high. A valid breakdown will signal a drop towards the upper median line (uml) of the red descending pitchfork. Right now will be better to stay away because we don’t have any trading opportunity, but I really hope that we’ll have one very soon. So you should stay away till we’ll have a fresh trading signal.