Early in the American session, gold (XAU/USD) reached a low of 1,854.35. This level was last seen on February 16. Gold is currently under strong downward pressure. However, it is reaching oversold levels and showing signs of exhaustion.
According to the daily chart, we can see that gold has reached a key support zone around the 200 EMA located at 1,857. This level is the key to expect gold to resume its upward movement in the medium term.
As long as gold remains above 1,857- 1,850 (200 EMA), it is likely to reach 6/8 Murray at 1,875 in the coming days. If it breaks through this resistance, it could quickly reach the zone 21 SMA located at 1,931.
The eagle indicator is reaching oversold levels. Gold is to consolidates above 1,857 in the next few days. We could expect a technical bounce which will give us an opportunity to buy.
Conversely, a close on daily charts below 1,850 would be a negative sign for gold and it is more likely to reach the zone 5/8 Murray at 1,812.50.
The Fed's decision will be provide us the key about gold due to the impact on US bonds. If bond yields fall, gold is likely to gain strength and could return above the psychological level of 1,900.
The highlight of the week is he Fed's policy decision on May 4. So we must brace for higher volatility in financial markets. It is better to be prudent and hope that the market can absorb the news in order to resume our operations.
On the other hand, Russian Foreign Minister Sergei Lavrov said that they rejected Ukraine's proposal to hold peace talks in Ukraine and warned that they should not underestimate the risks of a nuclear conflict. If this scenario occurs, it could favor gold and the US dollar, as safe haven assets.
Our trading plan for the next few days is to buy gold as it consolidates above 1,857 or in the extreme case above 1,850. Our short-term target will be 1,875 (6/8 Murray), 1,900 and 1,931 (21 SMA).