Gold (XAU/USD) turned down from near the psychological level of 2,000 and attracted bulls near the area of 1,937 yesterday in the American session.
Gold has extended its decline to 1,936, its lowest level in two weeks. After having reached the level of 1,937 around 7/8 of Murray, gold began a technical bounce that may extend into the European session.
On the 1-hour chart, gold has strong resistance at the 200 EMA located at 1,956. On the other hand, support at the 21 SMA located at 1,947 could offer gold an opportunity to continue its ascent.
Finally, there is a strong support level of 7/8 Murray at 1,937, which a technical rebound in this area could be a good buying opportunity.
Some factors that could favor the rise of gold are concerns about the conflict between Russia and Ukraine and growing inflationary pressures. These issues could fuel demand for XAU/USD as a safe-haven asset against rising costs.
Markets seem convinced that the Fed will tighten its monetary policy and expect multiple interest rate increases of 0.50%. During the week of May 2, we can expect the Fed to increase its interest rate and reach 1.0%. Meanwhile, markets are likely to continue to be under downward pressure and the US dollar will continue to strengthen.
On the technical side, a convincing break below the zone 1,936-1,930 will reaffirm the negative bias and make gold vulnerable to further declines.
Gold could accelerate the decline towards support at 1,915 and finally below 1,900 it could reach the support of 6/8 Murray at 1,985. The bearish pressure could increase only if there is a break in daily charts below 1,930 and it could be the start of a new short-term bearish move.
If gold trades above the 200 EMA at 1,956 it could lift towards the resistance level of 1,979. The uptrend could extend further above 1,979 and allow the bulls to make another attempt to break above the $2,000 psychological level.
