Early in the American session, gold is trading above the 200 EMA located at 1,810 and above Murray's 4/8. This break of the 200 moving average could be a positive sign for gold and it could go up to the level 5/8 Murray around 1,828. However, it is capped by the top of the uptrend channel.
Last week, gold was under bearish pressure. Among the factors that weakened gold is the firm US dollar and the rise in Treasury bond yields that remain above 1.90%. Investors are strongly uncertain, speculating on when exactly the Federal Reserve will start the cycle of interest rate hikes.
A daily close above 1,812 could enable further advances while in the opposite direction. If gold falls below 1,810, a return to the $1,800 psychological level is expected.
Investors will await data on the US Consumer Price Index (CPI), which could impact market expectations of a 50-basis point hike in interest rates from the Fed in March.
If the Fed increases its interest rate to 0.75%, this move could dampen the strength of gold and it could fall towards the level of 1,750 and even 1,680 in the short term.
Gold has strong resistance at the top of the uptrend channel around 1,817 - 1,819. This area is likely to be a barrier for gold and the price could make a return towards the 200 EMA or 21 SMA around 1,803.
Our trading plan is to wait for gold to touch the top of the uptrend channel around 1,819. So, we can sell with targets at 1,810 and up to 1,803. On the other hand, a technical bounce around the 21 SMA will be an opportunity to buy with goals at 1,828.
Support and Resistance Levels for February 7-8, 2022
Resistance (3) 1,840
Resistance (2) 1,827
Resistance (1) 1,817
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Support (1) 1,804
Support (2) 1,794
Support (3) 1,782
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