Early in the American session, Gold (XAU/USD) is trading at around 1,674. It is above the 21 SMA and above the descending triangle showing some positive outlook.

In the European session, gold managed to sharply break the downtrend channel and now it could be a positive sign for the coming hours. We must hope that the Fed's policy settings will support the technical outlook. For this, we only have to buy while it consolidates above 1,668.

The market will remain on the lookout for the Fed's announcements that will be published in the next few hours. This data is likely to exert strong volatility in gold and it could quickly reach the resistance zone of 1,687 (2/8 Murray). If the decision meets market expectations, gold could reach the top of the downtrend channel located at 1,713 (3/8 Murray).

Investors remain concerned about a global economic downturn. Another factor that could also send safe-haven flows into gold is the risk of a further escalation of the conflict between Russia and Ukraine.

Technically, we could expect gold to consolidate above the psychological level of 1,700 and above the 200 EMA (1,720). Later on, it could resume a bullish cycle and the price could reach levels of 4/8 Murray (1,750) and it could even reach the 200 EMA located at 1,799 on the daily chart.

Investors and analysts have priced in a rate hike of 0.75%. If the actual rate hike comes in line with expectations, gold is likely to benefit from this because such an increase was reflected in the strength of the dollar in recent weeks. hence, the market will react against the dollar, so gold could quickly strengthen and reach the levels of 1,787 and 1,720.

Our trading plan for the next few hours is to buy gold in case it consolidates above the 21 SMA located at 1,668, with targets at 1,687 and 1,720. On the contrary, if gold has a technical correction, it could test 1/8 Murray (1,656) as the last support that will give a technical rebound.