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  • Spot gold prices look likely to squeeze between a short-term uptrend support and resistance in the $1850s.
  • A break above the 200 and 50DMAs in the $1850s could open the door to a move towards late-January highs at $1875.

Spot gold prices were choppy on Wednesday, swinging between a roughly $20 range between the $1835 and $1855 levels, but still managed to close Wednesday’s session with gains of around 0.3%.

Looking at the spot price over a short time horizon, XAU/USD has respected an uptrend from the Monday Asia Pacific session open low at just under $1830. Meanwhile, XAU/USD’s 200-day moving average (DMA) at $1854 provided tough resistance on Wednesday, implying that so long as the precious metal continues to respect this week’s uptrend support and 200DMA resistance, prices should continue to squeeze in the hours/days ahead, forming an ascending triangle that would theoretically be subject to a break out to the upside.

Breaking above Wednesday’s high/the 200DMA will be tough as, as spot prices will also need to surpass the 50DMA at $1857. But should the bulls succeed, XAU/USD would then be in with a shot of rallying back towards its late-January highs of around $1875.

Conversely, failure to break above this tough area of resistance in the $1850s and a subsequent break below the uptrend that has offered support to the price action thus far this week would open the door to a test of support in the $1830-$1835 area (the 20 and 27 January and 2 February lows). A break below this level could open the door to a collapse back down towards this month’s low in the $1780s, ahead of lows set last November in the $1760s.

XAU/USD four hour chart