Market sentiment remains shaky as the Ukrainian crisis deepens, facing a double whammy from rising oil prices. Investors are taking refuge in the traditional safe haven of gold, which reached $2,000.
Gold opened the seesion with a bullish GAP in early trading this week to reach $2,000. In the early American session, the troy ounce is trading at $1,990, with a correction signal that could fall towards the 21 SMA.
On Wednesday, the CPI data will be published. On an annual basis, the CPI is expected to rise to 6.4% from 6% seen in January.
A sharp move higher in US Treasury yields following a strong CPI could push gold lower towards the SMA 21 at $1,947.
According to the 4-hour chart, we can see that gold has reached 8/8 Murray which represents strong resistance. If in the next few hours gold trades below this area, there is likely to be a correction towards 7/8 Murray around $1,968 and finally towards the $1,947 (21 SMA).
The technical picture suggests that gold remains bullish in the short term with the 200 EMA at $1,876. As long as gold trades above this level, any technical correction will be seen as an opportunity to continue buying in the medium term, with targets towards +1/8 Murray at $2,032.
The formation of the last candles on the 4-hour chart around the psychological level of $2,000 means that the bullish force is exhausted. A technical correction is likely in the next few days towards the support zone at 6/8 Murray around $1,937.
Given that the crisis regarding the Russian invasion continues to affect the markets, it is likely that investors will see the opportunity to continue buying gold when it falls to support levels to take refuge again and this could accelerate the upward movement to reach the zone of $2,031.
Our trading plan for the next few hours is to sell below $2,000 and take profit around the 21 SMA at $1,947. If gold makes a technical bounce around 21 SMA, this will be an opportunity to buy with targets at $1,968 and $2,000.