FX.co ★ Trading Signal for GOLD (XAU/USD) for January 06 - 09, 2023: sell in case of pullback at $1,842 - 1,850 (7/8 Murray - 21 SMA)

Early in the European session, Gold (XAU/USD) is trading around 1,834.473, below the 21 SMA and below the line of 7/8 Murray. We can see a technical bounce which could be considered a signal to resume selling only in case it trades below 1,850

US economic data released yesterday strengthened the dollar and put strong pressure on all currency pairs including gold. The ADP employment report showed private payrolls rising by 235,000 above the market consensus of 150,000.

Gold is strongly inversely correlated with Treasuries which was made evident when the US data was released. The yields on the US 10-year bond rose from 3.699% to 3.781%, while the 2-year bond yields jumped from 4.387% to 4.49%, the highest level since late November. If Treasury bonds continue to rise in the coming days, this could put strong pressure on gold and it could reach support levels of 1,812 (6/8 Murray).

Gold printed a low of 1,824.95 yesterday in the American session in response to the economic data from the United States. In about 24 hours, the XAU/USD pair fell almost $40 after reaching the high at 1,865.01 This could be a sign of a probable technical reversal. For this, gold should trade below the psychological level of 1,850.

In the next few hours, gold is expected to continue rising and can reach the 21 SMA located at 1,842 or 7/8 Murray around 1,843.75. Both levels could offer strong resistance and will be seen as an opportunity to sell.

The eagle indicator is reaching the extremely overbought zone. Hence, if gold continues to bounce and reaches the level of 1,844 or even 1,850 (weekly pivot point), it will be seen as an opportunity to sell, with targets at 1,830 and 1,812.