Early in the European session, Gold is trading around the 2,025, below the 200 EMA, and below the 3/8 Murray. On the H4 chart, we can see that XAU is under bearish pressure and is likely to continue its fall in the coming hours and could reach the psychological level of $2,000.
The FED Chairman's comments ruled out the chances of an interest rate cut in March, which stimulates the risk version. This favors the US dollar and, in turn, has caused a sharp drop in the price of gold. The metal is likely to continue its fall in the coming days.
US Treasury yields have a strong technical inverse correlation with gold. We note that this week, Treasury yields are rising. The benchmark 10-year Treasury yields are trading around 4.18%. If this trend continues, gold could reach the psychological level of $2,000 and could even break this zone and drop to the low of December 13 at 1,973.
In case gold tries to continue rising in the next hours, the instrument will have to face the strong resistance at 2,030 where the 200 EMA and the bottom of the uptrend channel that was broken around 2,033 is located.
In case gold tries to break 2,030 and if it fails to consolidate above this area, it will be seen as a signal to sell. Then, it could resume its bearish cycle and reach 2,015, 2,009 and finally, 4/8 Murray around $2,000.
On the contrary, if gold consolidates above 2,033 (5/8 Murray), it could start a new bullish cycle and could reach 2,039 (21 SMA). Finally, the price could approach the key level of 2,053.
Technically, gold is under strong bearish pressure. So, any technical bounce as long as it trades below 2,040 will be seen as a signal to sell. The metal is likely to reach the $2,000 area in the next few days.
