Yesterday, gold registered a low at 1,752 in light of the Fed's policy announcements. The US central bank is determined to increase the interest rates three times the next year, so it is going to resort to more aggressive tightening than expected. At the beginning of the news, the US dollar strengthened and gold fell, but this fact had already been discounted by the market and traders reacted against the dollar. Hence, gold strengthened as a safe haven for investors.
In almost 24 hours, gold has recovered approximately 320 pips which represents about $32 compared to yesterday's price. On the 4-hour chart, we can see that gold is currently breaking the downtrend channel and is above the 2/8 Murray and above the 21 SMA.
As long as gold consolidates above 1,781 and above the 21 SMA, it is expected that there will be an upward movement towards the 200 EMA located at 1,793. Additionally, if gold breaks this moving average and consolidates above 3/8 Murray, a bullish move will follow towards 4/8 located at 1,812.50.
Since December 8, the eagle indicator has been forming a modest bullish bias, moving above a trend channel. Given that the bullish force of the market still prevails, it is likely that there will also be a rebound in gold in the next few hours according to this indicator.
On the contrary, if gold closes below 1,775, it could resume the downtrend again and we would expect a drop to the level of 1,765 and to 0/8 of Murray at 1,750.
In view of the fact that the US dollar has entered a phase of a technical correction, investors are going to take refuge in gold in the coming days. The risk-off mood can give more impetus to this commodity. Gold might advance as high as 1,843.
Our trading plan is to buy above 1,781 with targets at 1,790 and 1,796. If the metal fails to break the 200 EMA, it will be a good opportunity to sell below 1,796 with targets towards 1,781. Gold is expected to trade between the range 1,800-1,781 in the next few days.
Support and Resistance Levels for December 16 - 17, 2021
Resistance (3) 1,804
Resistance (2) 1,798
Resistance (1) 1,787
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Support (1) 1,781
Support (2) 1,770
Support (3) 1,765
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A trading tip for GOLD on December 16 - 17, 2021
Buy above 1,781 (2/8) with take profit at 1,793 (200 EMA) and 1,797 (3/8), stop loss below 1,775.
