Early in the European session, gold is trading around 1,999.20 above the 21 SMA located at 1,990 and around the psychological level of $2,000. Gold made a strong technical rebound yesterday during the American session after reaching the bottom of the symmetrical triangle pattern around 1,976.13.
The US Consumer Confidence data supported the recovery of Gold and it accelerated its bullish movement, leading to a gain of about $27. It means that the instrument is preparing for a rally in the next few days and could reach +1/8 Murray around 2,031.
Another factor that has allowed XAU/USD to recover is the fall in Treasury bond yields. The 10-year yield is located at 3.42%. In case yields continue falling in the next few hours, it could support gold. In turn, gold could extend its upward cycle until it reaches 2,031.
On the other hand, in case gold trades below the psychological level of 2,000, a technical correction is expected towards the 21 SMA located around 1,990. We could expect a strong technical bounce to occur around this area, it will be seen as an opportunity to buy.
In gold falls and consolidates below 1,986 (21 SMA) in the next few hours, it will clearly be a signal to sell and the price could reach 7/8 Murray at 1,968 and could reach the bottom of the bearish channel formed from the beginning of April around 1,937.
Our trading plan for the next few hours is to sell below the psychological level of $2,000 with a target at 1,990. In case this zone acts as strong support, we can consider buying above 1,990 with targets at 2,011 and 2,031. If the bearish force prevails and XAU/USD consolidates below 1,986, we can sell with targets at 1,968 and 1,937.