Early in the European session, XAU/USD is trading around 1,926.83, maintaining a positive tone according to the 4-hour chart.
Yesterday, gold rebounded in confidence when it reached the psychological level of around $1,900. This level coincides with the 21 SMA on daily charts. As long as it trades above the 21 SMA in the daily chart, there is a strong probability that it will continue to rise and the price could reach the area of 1,960 heading towards $2,000.
US Treasury bond yields fell from their recent highs, thus providing gold with an advantage. If this downward trend continues in the next few hours, gold could reach levels of 1,950 and up to the weekly resistance of 1,966.
During the American session, the US central bank will publish the interest rate decision. It is expected that there will be an increase of 0.25%, thus minimizing the chances of a serious recession.
According to the 4-hour chart, the XAU/USD pair is expected to make a strong technical bounce around the support of 1,920. This area could offer an opportunity to buy with targets at 7/8 Murray located at 1,937. Additionally, a sharp break of this level could accelerate the bullish movement and the price could reach 1,949 and could even go towards the weekly resistance of 1,965.
On the other hand, in case there is a sharp break below the key support of 1,920 and consolidation below 1,915, there is a strong probability that gold could fall towards the psychological level of $1,900 and could even hit 6/8 Murray at 1,875.