XAUUSD – Sharp 5% Drop as Traders Take Profit Ahead of US CPI

Market Context:
Gold (XAU/USD) slumped over 5.5% on Tuesday, marking its largest daily decline in months as traders took profits ahead of the upcoming US CPI data (October 24).
The US Dollar Index (DXY) rebounded 0.36% to 98.94, making gold more expensive for foreign buyers.
This correction also coincides with renewed optimism over potential easing of US–China trade tensions, after President Trump confirmed plans to meet Chinese leader Xi Jinping next week.

While this sharp move caught many traders off guard, it appears to be a healthy correction within a broader bullish structure, as investors remain cautious before major data and the upcoming Fed policy meeting next week.

Technical Outlook (M30):

After the heavy selloff from the 4,375 high, gold found near-term support around 4,003 – 4,010, forming a potential accumulation base.
The pair now trades near 4,150, showing early signs of recovery toward key confluence zones.

Key Technical Levels:

OBS Sell Zone: 4,338 – 4,340
CP Zone Down / OBS Sell Zone: 4,259 – 4,260
CP Zone Up / OBS Buy Zone: 4,092 – 4,094
Deep Buy Zone: 4,003 – 4,008

The current structure outlines a 5-wave projection, where price may complete Wave II near 4,092, then advance toward Wave III at 4,259, followed by a correction (Wave IV) and another push toward Wave V near 4,338.

Trading Plan:

🔹 BUY ZONE#1 (Short-Term Recovery)
Entry: 4,092 – 4,094
Stop Loss: 4,080
Take Profit: 4,145 → 4,259 → 4,338


🔹 BUY ZONE #2 (Liquidity Sweep Scenario)
Entry: 4,003 – 4,008
Stop Loss: 3,990
Take Profit: 4,090 → 4,259

🔹 SELL ZONE (Countertrend Reaction)
Entry: 4,259 – 4,260
Stop Loss: 4,272
Take Profit: 4,145 → 4,092

Summary:
The recent 5% correction is viewed as a profit-taking phase ahead of CPI data, not a structural breakdown.
Gold is expected to stabilise above 4,092, with buyers likely stepping in near the OBS Buy Zone.
Focus remains on 4,259 for a short-term reaction and 4,338 as the next potential liquidity target if momentum continues.

📊 What’s your view — is this just a healthy retracement before CPI, or the start of a deeper shift?
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