Early in the American session, XAU/USD is trading below the 21 SMA located at 1,839 and below the 200 EMA located at 1,853. Gold is under bearish pressure. If it fails to consolidate above 1,843 (3/8 Murray), the price could resume the downward movement and could reach the area of 1,820.
Federal Reserve Governor Christopher Waller said the Fed is aiming to push down inflation and is open to another 75-basis point rate hike in July, but he ruled out a more extreme scenario of a 100-basis point hike.
In the chart above, we can see the formation of a bullish pennant. Only the sharp break above the 21 SMA and a close above 1,843 on the 4-hour chart will give us a signal to buy with targets at the 200 EMA located at 1,853 and 4/8 Murray at 1,875.
Gold is trading in neutral territory at 1,839 (21 SMA). To resume the uptrend, we should expect gold to trade above 1,845. On the other hand, if the bearish bias continues, as long as it stays within the bullish pennant, there will still be an opportunity to sell.
The market sentiment report shows that there are 81.3% of traders who are buying gold. This information proves that gold could remain under downward pressure and is likely to trade within the range between 1,875 and 1,820 in the coming days.
Our trading plan for the next few hours is to sell below 1,839 with targets at 1,830 and 1,820. If the bearish pressure persists, we could continue selling with targets at 2/8 Murray located at 1,812.