Early in the European session, Gold (XAU/USD) is trading around 1,965.47, above the 21 SMA, and the 200 EMA.
Yesterday during the American session, gold made a strong technical rebound after reaching the 6/8 Murray zone around 1,937 and then rose to 1,970.24.
The US inflation data released came below analysts' expectations, which weakened the strength of the US dollar and gold took advantage of this situation. The inflation data also caused US Treasury yields to fall, which also favored gold.
XAU/USD rose from $1,937 towards the daily high of $1,970, more than $33 of its price, which means that it could continue to rise in the next few days to reach the psychological level of $2,000. However, since it is showing signs of exhaustion, a technical correction towards the 21 SMA or towards the daily point located around 1956 is likely to occur.
In the coming hours, we expect gold to make a technical correction and then resume its upward cycle.
On the other hand, gold could find a strong barrier around the weekly resistance located at 1,975 or around the key area of 1,977. In case this scenario occurs, gold could fall below this area. Only if XAU/USD fails to consolidate above 1,977, this could be seen as an opportunity to sell with targets at 1,958 and 1,953.