Early in the Asian session, gold (XAU/USD) is trading above the 21 SMA located at 1,833, and below the 200 EMA located at 1,854.

Investors seem convinced that the US central bank will maintain its aggressive hawkish policy to combat persistent inflation. This is a factor that prevents gold from returning to the levels of 1,900 or even 1,937.

On the other hand, a factor that could help the recovery of gold is the decline in yields on US Treasury bonds because it has an inverse correlation. Last week, investors took comfort in the fact that the Fed expects the key interest rate could fall to 3.4% in 2024 and 2.5% in the long term.

On the 4-hour chart, we can see that gold is bouncing above the 21 SMA and above the downtrend channel formed on the 4-hour chart from the low of 1,805.

Last week, gold reached the 200 EMA located at 1,854. From that level, gold has been correcting and is forming a bullish pennant pattern. This pattern has a positive signal. If in the next few hours the price breaks and consolidates above 3/8 Murray located at 1,843, it could reach 4/8 Murray at 1,875.

Gold has a bullish outlook as it remains trading above the 21 SMA (1833). As long as it consolidates above this level, there is a chance to continue buying.

Conversely, if gold breaks below 1,830, we could expect an acceleration to the downside and the price could once again return to the level of 2/8 Murray support at 1,812.

For gold to start a short-term uptrend and turn fully bullish, we should expect a daily close above the 200 EMA located at 1,854. Above this level, it could reach 4/8 Murray at 1,875 and even reach the psychological level of 1,900.

Our trading plan for the next few hours is to buy gold if it breaks the bullish pennant above 1,843 with targets at 1,854. Additionally, a break above 1,854 will allow us to buy with targets at 1,875. The eagle indicator is giving a positive signal which supports our bullish strategy.