Early in the American session, Gold (XAU/USD) is trading at around 1,620.85. It is trading below the pivot point of 4/8 Murray located at 1,625.
Gold lost almost $49 in less than 24 hours and is under strong downward pressure. The negative bias remains firm in the face of a broad-based rise in the dollar and an advance in Treasury bond yields.
In the short term, the outlook could continue to be negative for gold and it could reach 3/8 Murray located at 1,593. Conversely, a technical rebound could occur if gold manages to consolidate above 1,615 or 1,625 and could reach the 21 SMA located at 1,641.
The precious metal reached a peak of 1,669.37 on Wednesday after the Federal Reserve's decision to raise the rate by 0.75%. This was already expected because the market had discounted the fact.
However, at the press conference, Powell stated that the final rate will be higher than previously expected. His message was bullish for the dollar. The greenback changed direction, thus putting downward pressure on XAU/USD and is now likely to find support at 1,615.
If the declines extend, gold will face the one-year low reached in September at 1,614.71. This level is relevant to support. A daily close below this level would pave the way for a test of $1,600 and even $1,593 (5/8).
A technical bounce above 1,641 (21 SMA) would relieve bearish pressure and gold could rally and reach 1,687 (6/8 Murray) and even the psychological level of 1,700.
Our trading plan for the next few hours is to buy above 1,615 with targets at 1,625 and 1,641. On the other hand, in case of a pullback towards 1,641 (21 SMA), it will be an opportunity to sell with targets at 1,593. The eagle indicator is giving a negative signal, so any technical bounce will be seen as an opportunity to sell.
