FX.co ★ Trading Signal for GOLD (XAU/USD) on August 17 - 18, 2022: sell if gold breaks $1,773 (200 EMA - key level)

Early in the European session, gold (XAU/USD) is trading above the 200 EMA located at 1,773. After having reached the high of 1,807.78, gold started a strong technical correction and is now trading at key support levels.

On the 4-hour chart we can see that gold has formed an uptrend channel since the beginning of August. We can also observe a bearish channel that has formed since gold reached the maximum of 1,807.

In the event that gold manages to consolidate above the key level of 1,770, it is expected that it can resume the bullish cycle and could reach the 21 SMA located at 1,784 and 1,795. A sharp break in the downtrend channel could accelerate the bullish movement towards 6/8 Murray located at 1,812.

The rise in Treasury bond yields may be a factor that could put pressure on the XAU/USD pair.

Tomorrow is the FOMC meeting. The FED is expected to raise rates by 50 basis points in September. At the moment, the odds of a 50-basis point rate hike in September are 70%.

The interest rate increase by the United States could continue to affect the strength of gold, and it would resume its bearish cycle and could reach the key support zone of 2/8 Murray located at 1,687.

In the event that gold breaks the 200 EMA located at 1,773 and consolidates below this level, a drop to 1,750 (4/8 Murray) and to 3/8 Murray at 1,718 is expected.

Our trading plan for the next few hours is to buy above 1,770 (200 EMA) with targets at 1,784 and 1,795. In case of a sharp break and consolidation below 1,766, it will be a clear signal to sell with the targets at 1,750 and 1,718.