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Gold - The False Break Down is a Bullish Sign

So far this week, gold has been consolidating in a narrow range roughly between 1323.80 and 1332.60. This stands on top of a broken 2-week consolidation range roughly between 1306 and 1326. Today, price action was USD-positive, and XAU/USD was pulled down below 1323. However, traders quickly bought gold back into this week's range, and the focus is now back to the range high at 1332.60. The false breakdown reflects respect for the 2-week consolidation range as support, and suggests traders will be looking to buy up gold even higher.

gold (xau/usd) 1h chart 7/2

Note on the daily chart that gold is now testing an April and also the 61.8% retracement both around around 1332. If price can clear above 1333, the near-term target would be the 1342.40 resistance pivot from March. 

gold (xau/usd) daily chart 7/2

Tomorrow's ECB meeting and US NFP data can shake up the market. When its all said and done, if gold holds above 1315 (middle of last 2 weeks' range), then the bullish outlook is still in play. Otherwise, the focus could return to the 1300 level, and the market might be slightly bearish, but essentially remaining in consolidation based on the daily chart.