Early in the American session, gold is trading around 2,569 showing a positive signal. The price is likely to continue a bullish recovery cycle in the next few hours to reach 2/8 Murray at 2,578.
If XAU/USD climbs above the 2,578 barrier, it could reach the 21 SMA which acts as another resistance around 2,585. Eventually, the metal could reach the top of the downtrend channel around 2,695.
Since October 30th, gold has been following a bearish movement from 2,790. It extended its slide until it reached the 1/8 Murray level around 2,539 which coincided with the bottom of the downtrend channel. Since then, we have seen a strong technical bounce which could be viewed as a signal to buy in the coming days if the gold price consolidates above 2,560.
On the other hand, in case gold encounters a barrier around 2,585, it will be seen as a signal to sell, with the target at 2,539.
A consolidation above the psychological level of 2,600 on the H4 chart will be seen as an opportunity to resume buying. Therefore, the metal could reach the 200 EMA around 2,663 in the short term.
