Early in the American session, Gold (XAU/USD) is trading around 1,988.19, bouncing after hitting a low of 1,975.84. We can see on the H4 chart that gold is below the 21 SMA, below the 200 EMA, and below the 4/8 Murray which represents the psychological level of $2,000.
Because gold trades within a downtrend channel formed since early December, it is likely to continue to fall in the coming hours and could bounce around the daily support at 1,980. In case this level is broken, the metal could reach the bottom of the uptrend channel around 1,965.
In the next few hours, US inflation data will be released. If gold reaches the 1,994 zone or the psychological level of $2,000, this move could be seen as a signal to sell with the target at 1,980.
Conversely, in case gold falls following the US inflation data, it is expected to consolidate above 1,980 which could be seen as an opportunity to buy with the targets at 1,994 and the top of the uptrend channel around 2,006.
Because gold is under strong bearish pressure, we can expect it to consolidate between the 1,980 area. In case this level is broken, the price would remain at 1,965. Both levels would offer us a buying opportunity. The eagle indicator is showing extremely oversold signals. Hence, a technical rebound is likely to occur in the coming days.
