Gold (XAU/USD) is trading around 1,810, showing levels of exhaustion and a technical correction after the rally that took place on Tuesday in the American session.
Gold rose sharply amid the weak US dollar after the US CPI release. The inflation data came out below market expectations at an annual rate of 7.1% in November, below the 7.3% expected by analysts.
Following the release of the US data, the XAU/USD pair reached a high of 1,824.33 and we are now seeing a technical correction that could lead the price to the support zone of 1,795.
If gold trades below +2/8 Murray in the next few hours, the technical correction is likely to continue and the price could reach the area of 1,794 and could even touch the bottom of the uptrend channel around 1,781 (+1/8 Murray).
The US central bank will announce its monetary policy during the American session and is expected to raise interest rates by 0.50%. The rate hike above this level could prop up the US dollar and consequently could increase Treasury yields which would cause gold to fall below 1,781 reaching levels of 1,750 (200 EMA).
In case the actual rate hike agrees with what is expected by the market, it is likely that gold will resume its bullish cycle and it could reach the level of 1,824. It could even reach the level of 1,844 (7/8 Murray on daily charts).
Our trading plan for the next few hours is to sell gold below 1,812 with targets at 1,794 and 1,781. On the other hand, in case there is a pullback towards the area of 1,824, it will be a signal to sell again with the target at 1,781. Since the beginning of December, the eagle indicator has been giving a negative signal and any technical rebound is likely to be seen as an opportunity to sell.
