Early in the American session, gold is trading at around 1,739 after having bottomed out at 1,732, the level last seen in September 2021.
Gold is bouncing and a recovery is likely to occur in the next few hours. The formation of a double bottom reversal pattern is in progress. This is a positive sign, but it will only be temporary. As long as gold remains above 1,732, the price is expected to reach the 0/8 Murray resistance zone at around 1,750 and even the 21 SMA at 1,756.
According to the 4-hour chart, gold has been trading below a downtrend channel formed since June 20th. Gold broke this channel and accelerated its decline towards the 1,732 zone. It has now become a strong top and a pullback towards this zone is expected at around 1,757 to resume its downtrend.
The 10-year Treasury yield jumped to 3.01%, while the 2-year Treasury yield hit 3.05%. Investors took refuge in the US dollar due to the prospects of a global economic recession.
Gold remains under downward pressure, as there is a strong correlation with Treasury yields. We can see this morning that there is a decline in Treasury bonds which could encourage the recovery of gold in the coming hours and even in the coming days.
Our trading plan for the next few hours is to buy gold at around the current prices of 1,739 with targets at 1,750 and the 21 SMA at 1,756.
Additionally, we expect a pullback to occur at 1,756 or at the top of the downtrend channel around 1,760 to sell with targets at 1,740 and 1,713.
The Aguilar indicator has reached the extremely oversold zone. In the next few hours, a technical rebound is imminent and the price could reach the 1,756 zone. Therefore, our perspective will remain bullish while gold trades above 1,732.