Gold trading was flat since the beginning of the week until continuing today (Wednesday) as investors continue to await clearer indications of the direction of further market movement.
The significant drop in prices that occurred at the close of trading last week following the reaction to the release of the US NFP employment data report is seen not to continue this week.
The focus early this morning was the speech by Federal Reserve (Fed) Chairman Jerome Powell, leaving investors still confused about the central bank's monetary policy.
This is due to a change in Powell's previously more dovish tone that tends to slow policy tightening, but is also influenced by the strong employment report.
Powell stated that inflation is expected to fall again this year, but it is also possible that interest rate increases will be implemented based on the latest data that appears.
The XAU/USD price chart which measures the value of gold against the US dollar is seen moving horizontally at the 1870.00 focus zone from the beginning of the week.
There is a bullish signal when the price starts moving above the Moving Average 50 (MA50) support level on the 1-hour time frame on the XAU/USD chart.
Prices were flat around 1876.00 in the Asian session this morning before a slight increase was shown early in the European session.
The increase if successful continues is seen to go to the 1900.00 level for the price to test the SBR (support become resistance) zone.
A further move higher would expect the price to head back to the resistance zone reached last week at 1950.00.
However if the price starts to plunge lower below the 1870.00 zone, investors should prepare for a further drop in gold prices.
The price drop can reach up to around 1830.00 which is expected to be a support level for the price.
