Early in the European session, gold (XAU/USD) was trading around 1,755 with a positive bias and is likely to continue rising towards the 200 EMA located at 1,766.
Gold continues to rise for the third day in a row. The metal consolidated above the 21 SMA (1,744) and above 4/8 Murray (1,750). The price of gold is now consolidating above the 23.6% Fibonacci retracement (1,746).
Gold has found resistance at 38.2% (1,759) and 50% Fibonacci (1,768). The latter coincides with the 200 EMA located at 1,766. A pullback towards this level will be considered an opportunity to sell with targets at the 21 SMA located at 1,744.
However, according to the daily chart and the H4 chart, the bias continues to favor the downside. XAU/USD is trading below 1,766 where the 200 EMA is located on the 4-hour chart and at 1,819 on the daily chart (200 EMA). As long as it remains below these levels, it will be seen as an opportunity to sell.
According to the 4-hour chart, gold is trading above the 21 SMA. It is likely that any technical bounce towards this area around 1,744 will be seen as a buying opportunity with the targets at 1,759 and 1,766.
On the other hand, gold could be making a technical bounce to resume the main downtrend and this could push the price towards the psychological level of 1,700. The key will be to wait for gold to trade below the 200 EMA as trading above would change the outlook.
Additionally, this outlook can be considered because the market expects the Fed to increase the interest rate from 0.50% to 0.75% in September.
This, in turn, would trigger a rally in Treasuries. Since they are inversely correlated with gold, this could make it difficult for the asset to appreciate. So, gold could resume the main downtrend.
Our trading plan for the next few hours is to buy gold above 4/8 Murray or at 1,744 in case there is a technical bounce, with the target at 1,766. On the other hand, we can wait for a pullback at 1,766 to sell with the targets at 1,750 and 1,728.
