Early in the American session, Gold (XAU/USD) is trading at around 1,663, showing slight exhaustion after the price reached a high of 1,674.10 in the European session.
For now, XAU/USD's rally could be temporary and could signify an easing of bearish pressure. The long-term trend remains bearish and as long as gold trades below the 200 EMA. Whenever the price approaches this level, it will be considered an opportunity to sell.
Key support can be found around 1,660- 1,656 (5/8). The top of the bearish channel converges at the same level. A daily close below this area could anticipate more lows. Below is the support of 1,646 (21 SMA) whose break would increase negative pressure and the asset could fall towards the support of 4/8 Murray at 1,625.
To the upside, XAU/USD needs to hold above 1,670 to keep the possibility of a further upside. A consolidation above 1,660-1,670 would pave the way for more upside and the price could reach 6/8 Murray at 1,687 and even reach 200 EMA located at 1,696 and a psychological level of 1,700.
That said, the risk-aversion mood still prevails amid growing concerns about a global economic downturn and geopolitical risk. The risk-off mood could push the price of the precious metal higher as gold is a safe haven in times of crisis.
Our trading plan for the next few hours is to sell gold below 1,660 with targets at 1,646. In case of a breakout of the 21 SMA around 1,645, it will be an opportunity to continue selling with targets at 4/8 Murray located at 1,645.