The gold price is trading in the red at $2,152 at the time of writing. The precious metal seems determined to extend its sell-off.

One significant factor contributing to gold’s weakness is the dollar’s outperformance in the wake of the FOMC rate decision and monetary policy statement.

Yesterday, the BOJ delivered a 0.20% rate hike, so the BOJ Policy Rate jumped from -0.10% to 0.10%, while the RBA left the monetary policy unchanged.

Furthermore, the Canadian CPI reported a 0.3% growth versus the estimated 0.6% growth, but it was above the 0.0% growth in the previous reporting period. Gold remains under pressure also because the US Building Permits and Housing Starts came in better than expected.

Today, the United Kingdom Consumer Price Index reported only a 3.4% growth versus the 3.5% growth estimated after the 4.0% growth in the previous reporting period. At the same time, Core CPI came in worse than expected as well.

Later, the FOMC should drive the markets. The FED is expected to keep the Federal Funds Rate at 5.50%, but the FOMC Statement and the FOMC Press Conference should bring high volatility.

Technically, the price retested the downtrend line, which is a dynamic resistance. As long as it stays below it, the metal could drop deeper.

The former lows of $2,148 and $2,146 represent immediate downside obstacles. Making a new lower low could activate more declines. The channel’s downside line is seen as a potential target if the rate continues to drop.

On the contrary, staying above $2,146 and making a valid breakout through the downtrend line indicates that the correction ended and that we may have an upside continuation.