FX.co ★ Trading Signal for GOLD (XAU/USD) for August 29 - 30, 2022: buy above $1,718 (3/8 Murray - oversold)

Early in the European session, Gold (XAU/USD) is trading at around 1,726. We can see the price dropping from 1,935 since the opening of this trading week. The metal is likely to continue its decline and could reach the support zone of 1,718 located around of 3/8 Murray.

The sharp drop in all assets seen on Friday was due to the FED Chairman's speech who mentioned that higher interest rates would persist for some time.

These comments were seen by the market as an opportunity to buy the US dollar, and gold fell as a result. We can also see a strong rally in Treasury bonds which could continue to affect the recovery of gold in the coming days.

Gold is trading below 4/8 Murray and below the two moving averages of 21 and 200. This means that in the short term any technical bounce will be seen as an opportunity to sell and the price could reach the support zone of 1,718 and even the psychological level of 1,700.

The 4-hour chart shows that gold is oversold and a technical bounce is likely in the next few hours at around 1,725 or around 3/8 Murray at 1,718. In case the price consolidates around this area, it will be seen as an opportunity to buy with targets at the 21 SMA located at 1,749.

On the other hand, if bearish pressure prevails and gold falls below 1,700, it could mean a bearish acceleration and this could enable the decline toward 2/8 Murray located at 1,687.

A daily close below the psychological level of 1,700 could mean a bearish move for gold which could be seen as an opportunity to resume selling. Thus, gold could continue its decline to 1,656 (1/8 Murray) in the short term.

Our trading plan for the next few hours is to buy at around 1,725 or around 1,718. Above these levels, we could expect a technical rebound and buy with targets at 1,750. On the contrary, if gold trades below this area, we should avoid buying and wait for the market to consolidate.