After failing to sustain its recovery over $1,946.00 during the Asian session, the GOLD price (XAU/USD) has retreated to the $1,940.00 support level. While investors wait for the release of the Federal Reserve’s (Fed) interest rate decision, the precious metal is expected to trade sideways, with many delaying the execution of substantial bets until after the announcement.

GOLD has been battling to keep its recent upward momentum despite the recent dip in the US Dollar Index (DXY). In the wake of the failure of three medium-sized banks in the United States this week, investors have been fleeing to safer havens, driving up the price of GOLD .

Concerns about additional upheaval in the financial sector have been eased somewhat by statements made by United States Treasury Secretary Janet Yellen regarding the efficacy of the Federal Reserve’s Bank Term Funding facility and discount window lending. Gold’s safe-haven appeal has been diminished, which has helped increase First Republic Bank stock.

The US Dollar Index (DXY) has been relatively unchanged at 103.20 as investors wait for the Fed to raise interest rates by 25 basis points (bp). There is an 85% chance of a 25bp rate hike, which would bring rates to 4.75-5.00%, as predicted by the CME Fedwatch tool.

Gold Technical Outlook

On an hourly scale, the price of GOLD has experienced a sharp decline following the breakdown of the Head and Shoulder chart pattern. This breakdown is indicative of a bearish reversal after a period of consolidation. As a result, gold prices have fallen towards a demand zone in the range of $1,933.90 to $1,938.40.

Despite the decline, the 20-period Exponential Moving Average (EMA) at approximately $1,950.00 is expected to continue acting as a barrier for GOLD bulls.