Early in the American session, gold (XAU/USD) is trading at around 1,709 above the 21 SMA (1,708) and below the 3/8 Murray (1,718).
Yesterday, gold reached a high of 1,726, the level of August 30. This level coincided with the top of the downtrend channel. Since it failed to break it, the metal is now trading below this level under downward pressure.
The strong dollar (USDX) and the global rise in Treasury yields are negative factors for XAU/USD. Normal activity will return to Wall Street on Tuesday after Monday's holiday.
The 4-hour chart shows that the asset remains at downside risk, consolidating below a critical resistance level at 3/8 Murray (1,718) and within the bearish channel which has been in progress since early August.
The eagle indicator is showing oversold signals. It is likely that as long as it consolidates above the 21 SMA, there could be a technical bounce and it could reach the area again around 1,718-1,721.
If gold consolidates above the psychological level of 1,700 in the next few hours, it is expected to reach the EMA 200 area located at 1,751 in the next few days. In the opposite direction, the 1,708 area (21 SMA) has become the key support.
Below 1,700, the bearish bias could increase and the price could fall towards 2/8 Murray at 1,687.
From the global point of view for gold, the overall trend remains bearish. The bears' target is at 1/8 Murray around $1,656. Only a close above the 200 EMA located at 1,751 could encourage the recovery of gold in the medium term and its price could reach the psychological level of 1,800 and could even exceed this level.
In the meantime, any attempt to recover will be seen as an opportunity to continue selling. If gold manages to reach the top of the downtrend channel at 1,721 in the next few hours, it will be seen as an opportunity to sell with targets at 1,708 and 1,687.
Conversely, if gold consolidates above 1,708 (21 SMA), it will be an opportunity to buy with targets at 1,718 and 1,721. A daily close below 1,705 could mean a further bearish move and we could sell with targets at 1,696-1,687 (2/8 Murray).