FX.co ★ Trading Signal for GOLD (XAU/USD) for May 30-31, 2023: buy above $1,947 (21 SMA - falling wedge )

Early in the American session, gold is trading around 1,957.10 above the 21 SMA and above the 7/8 Murray. In the European session in Europe, XAU/USD reached the low of 1,932.08, a key level that coincided with daily support_3 that offered a strong technical rebound.

Optimism is growing among investors after the tentative agreement between the White House and the US Congress to raise the US debt ceiling. This fuels risk appetite, weakening the US dollar and offering a strong rally to gold.

The yields of the US Treasury bond, in particular the 10-year reference rate, reached the high of 3.858%. Since then, a decrease of -0.088 has been observed, showing a return of 3.70% which encourages the recovery of gold.

In the next few hours, we expect XAU/USD to make a correction towards the 21 SMA located at 1,947. This level could offer a strong technical rebound and gold could continue to rise until reaching the 200 EMA located at 1,980.

Additionally, the falling wedge technical pattern offers the possibility that gold could continue to rise in the coming days and reach 8/8 Murray located around the psychological level of $2,000.

Also, on the 4-hour chart, we can see that since the beginning of May gold has been forming a downtrend channel. This morning during the American session, the price reached the top of this channel and was rejected. Thus, gold is likely to remain under bearish pressure below this level.

In the event that gold breaks and consolidate above 1,963 on the 4-hour chart, this could be a clear signal for the start of a new bullish cycle and the instrument could reach 1,980 and $2,000.

Our trading plan for the next few hours is to wait for a technical correction to resume the bullish cycle and buy with a target at 1,980. The eagle indicator is giving a positive signal. Hence, gold is likely to carry on with its rise in the coming days.