Since last week when gold reached the all-time high 2,070, the price has extended its recent sharp pullback, and has fallen sharply when it broke the 21 SMA on March 9 around the psychological level of 2,000.
Today is the fourth day of the negative movement that has dragged prices to a low around the area of 1,920. Gold is expected to continue its fall in the next few hours, although it could find a strong bottom at the 200 EMA around 1,910.
At the fundamental level, the hopes of progress in the talks on the ceasefire between Russia and Ukraine and a diplomatic solution to end the war was the determining factor for gold to fall sharply.
The Russian and Ukrainian delegations held the fourth round of negotiations on Monday and the discussions are scheduled to resume on Tuesday. An optimistic deal could weaken gold further and the price could drop to 6/8 Murray at 1,875.
On the other hand, the most important event this week will be policy decisions by the Federal Reserve. Investors seem convinced that the Fed will confirm an imminent start to tighten its monetary policy and will raise its interest rate by 25 basic points, but could surprise with an increase of 50 bp.
A sharp break below the 200 EMA (1,910) could accelerate gold's decline and the price could test the psychological level at 1,900. Next, 6/8 Murray is located at 1,875, where gold is expected to make a strong technical rebound. However, if it breaks decisively, it will change the short-term bias and accelerate the fall to 1,812 (5/8 Murray)
On the other hand, as long as gold keeps trading above the 200 EMA around 1,910, it could grasp a chance to recover and go back to the 1,971 level (SMA 21) and up to 8/8 of Murray at $2,000.
Sustained strength above 1,937 (7/8 Murray) will have the potential to push gold towards the key psychological level of 2,000. Above 8/8 Murray, the way is clear for gold to resume its upward move and reach +1/8 Murray at 2,062.