FX.co ★ Trading Signal for Gold (XAU/USD) for May 3-4, 2023: Key level of $2,020 (+1/8 Murray - 21 SMA)

Early in the European session, Gold (XAU/USD) is trading around 2,017.63, around the top of the downtrend channel formed since April 12, and above the 21 SMA and 200 EMA. We can see a strong uptrend, but it is showing signs of exhaustion and a technical correction is likely to occur before the instrument continues its bullish cycle.

During the American session, the US interest rate decision will be announced. This announcement will generate strong volatility in gold and the price could reach levels of $2,000 or $2,031 as immediate support and resistance.

Since April 14, XAU/USD has been forming a pattern of a symmetrical triangle. This pattern was broken yesterday in the American session and a technical correction is likely to unfold towards the top of this pattern which has now become support around 2,005. Then, the metal will resume its bullish cycle.

On the other hand, in case there is a sharp break above 1,920, it is likely that gold will continue to rise and can cover the gap that it left around 2,023. If the bullish force prevails, the instrument could carry on with its rise and reach 8/8 Murray located at 2,031.

In case gold finds rejection around 2,031 (+1/8 Murray), we could expect this area to act as a key point to sell. If this scenario happens, we should bear in mind overbought market conditions, so a technical correction towards the psychological level of $2,000 could occur.

In case gold falls from current price levels below 2,020, it could reach the daily pivot point located at 2,004. A daily close below this level could be a clear signal to resume selling and the instrument could reach 1,987 (21 SMA) and 1,974 (200 EMA).