XAU/USD has been oscillating in the trading range between 1,750 and support at 1,732. As long as it does not signal a confirmed break, the metal will remain trapped in the range in the coming days.
According to the 4-hour chart, gold is trading inside a downtrend channel formed on June 1st. According to the technical indicators, gold is in an oversold zone and a strong technical rebound is expected in the coming days. Gold could consolidate above 1,732 in case of a bounce at 1,718, then it could challenge the 21-day line and reach 1,800.
The dollar index (USDX) is falling below 107.00, so the euro and gold could take an advantage of the dollar's retreat while the 10-year US Treasury bond yield is trading around 3.058%. All in all, a decline in the dollar index and in treasury bonds could favor the recovery of gold.
The price of gold reached a low of 1,732 when it hit the bottom of the downtrend channel. It has been bouncing from this level and has found strong resistance at the 21 SMA at around 1,747.
Gold has strong resistance at 0/8 Murray at around 1,750. A daily close on the daily chart above this level could encourage a recovery in gold and the price could reach the area of 1/8 Murray at 1,781 or even reach the top of the downtrend channel at around 1,790.
On the other hand, should gold remain below the 21 SMA, just this level coincides with 0/8 Murray and the metal could resume the main bearish move and the price could reach -1/8 Murray at 1,718.
On July 6, the eagle indicator on July 6 reached the extremely oversold zone of around 5-points. It could be a positive sign for gold's recovery, only if the price manages to break and trade above 1,750.
