Early in the European session, Gold (XAU/USD) is trading around 1,956.77 above the 21 SMA and below the 200 EMA.
The price of gold rebounded from the lows of 1,924.76, supported by the weakness of the US Dollar (USDX) and the fall in US bond yields as the main factors that favored the rise of the yellow metal.
Yesterday, gold recovered from a sharp decline around 1,924, the rebound took it to the 1,962 zone. This volatility in the gold price of almost $40 could be seen as a positive sign. If the trend continues, it is likely that in the next few days, it will consolidate above 1,975. Then, we could expect the bullish cycle to resume and the instrument could reach $2,000 and even +1/8 Murray around 2,062.
The H4 chart shows that gold has found strong resistance around the 1,963 level coinciding with the top of the downtrend channel and with the 200 EMA. In the next few hours, if the price continues negotiating below this level, a technical correction is likely to follow.
Given that gold is moving within a downtrend channel, we could expect it to reach the 1,950 zone (21 SMA) in the next few days and could even reach 1,922, an area that coincides with the bottom of the bearish channel, formed since May 23.
In case of a sharp break and consolidation above the 200 EMA (1,964) on the H4 chart, gold is expected to reach an area of 1,975. This will prove to be the last barrier for gold and then, we could expect it to go up and reach 8/8 Murray around the psychological level of $2,000.
As long as gold trades below 1,963 (200 EMA), it is expected to reach again the key support level around 7/8 Murray. It will be seen as an opportunity to sell, with targets at 1,937 (7/8 Murray) and 1,922.