Early in the American session, Gold (XAU/USD) is trading at around 1,713. A slight technical bounce is seen after the price fell to a low of 1,709.57 in the European session.
Gold has a strong bearish signal. However, it could be reaching oversold levels and a technical bounce is highly probable. So, the metal could reach the top of the downtrend channel at around 1,726.
The US dollar index reached a high of 109.14. Meanwhile, the 10-year US Treasury bond yield is trading at 3.140%, adding downward pressure to gold.
In light of strong data on US consumer confidence and encouraging data on employment, investors could reinforce expectations of a 0.75% interest rate hike in September.
The resurgence of buying could push XAU/USD towards the 200 EMA at around 1,743. If this happens, we should expect gold to trade above the 21 SMA (1.721). Above this level, the outlook could change.
IIn case gold trades at around the psychological level of 1,700, we could expect consolidation in this area and it could be an opportunity to buy gold with targets at 1,721 and 1,743.
On the other hand, in case there is a pullback towards the area of 3/8 Murray or towards the 21 SMA (1,721-1,726), it will be a signal to sell with targets at 1,700 and 2/8 Murray located at 1,687.