XAU/USD is breaking the downtrend channel formed on July 5th and is now trading at around 1,818 just above 3/8 Murray. It is expected that in the next few hours it will consolidate above this level and could reach 1,730 and 4/8 Murray at 1,750.

The main factor for the advance of the metal can be seen in the sovereign bond market. Yields of US 10-year Treasuries are retreating, trading at 2.82%, the lowest since July 6. As long as Treasuries remain in technical correction, gold could gain upward momentum.

In less than 24 hours, gold has recovered more than $40 after falling to $1,680 on Thursday, the lowest level since August 2021. This rapid recovery is a positive sign of a possible change in trend in the short term.

21 SMA is giving the pair a positive outlook. As long as it trades above the level of around 1,707, the bullish bias is expected to prevail.

The eagle indicator is approaching overbought levels. As long as the metal trades below 4/8 Murray, any bullish momentum approaching this zone will be seen as an opportunity to sell.

The short-term picture has a bullish bias, which will change if the price returns to levels below 1,707-1,700 (21 SMA). A daily close below this level will be considered a negative sign, so the metal could resume the bearish trend and it could fall back towards the area 2/8 Murray at 1,687.

Conversely, as long as it trades above 1,713, which has now become its support of the downtrend channel that was broken, could give gold a strong boost. In case the price consolidates above this level, gold could reach 1,730 and could even break 4/8 Murray at 1,750 and finally reach the 200 EMA at 1,776.

Our trading plan for the next few hours is to buy above 1,713 or above 3/8 Murray at 1,718 with targets at 1,730, 1,750 (4/8) and 1,770 (200 EMA).