Early in the European session, gold is trading around 3,963 above the 200 EMA, rebounding after reaching the 5/8 Murray level during the New York session yesterday.

Gold reached a low not seen since early October, around 3,886. Since then, gold has been recovering some of its losses and is now consolidating above 3,950, which has become a strong support level.

If gold reaches the 5/8 Murray level again in the next few hours, around 3,906, it will be seen as a good buying opportunity with targets around the psychological level of $4,000.

If the gold price sharply breaks the downtrend channel formed since October 20, we could see a new bullish sequence during which the istrument could reach the 6/8 Murray around 4,062 and even return to the 7/8 Murray around 4,218.

The short-term outlook for gold is to recover above 3,906, as the Eagle Indicator has reached oversold levels, and we are likely to expect the price to reach the key point of 4,062 around the 6/8 Murray.