Early in the American session, gold (XAU/USD) is trading around 1,967, below the 3/8 Murray, and below the 61.8% Fibonacci retracement (1,984 -1,951).
In the 4-hour chart, we can see that gold reached a high at about 1,974 during the European session. We now see a technical correction, so the price is likely to reach 1,962 (21 SMA). If this level is broken, the metal could drop to 1,951 around the 200 EMA.
In the chart above, we can see that since July 17 gold has been trading within a downtrend channel. This channel was broken yesterday. The odds are the metal will have a technical correction in the next few hours and the price could resume its bullish cycle and reach the psychological level of $2,000.
In the next hours during the afternoon of the American session, the Central Bank of the United States is expected to increase the funds rate by 0.25% to reach 5.50%.
This outcome is already known by investors. Hence, strong volatility is not expected, but the FED Chairman's speech could shake the market. If he says that they put a longer pause in their rising cycle, then gold could gain bullish strength.
Meanwhile, we expect gold to consolidate below 1,974 (61.8%) and above 1,951 (200 EMA). A favorable policy decision for the US dollar could put pressure on gold and it could fall towards the zone of 2/8 Murray located at 1,937.
On the other hand, if gold breaks the daily high of 1,974, we could expect it to accelerate its bullish movement and the instrument could reach 1,987 and even 4/8 Murray ($2,000).
The eagle indicator is in a neutral zone. Gold is likely to make a technical correction. We could look at the area of 1,951 (200 EMA) in case there is a technical bounce as an opportunity to buy with targets at 1,968 and $2,000.
