• Gold price bulls are in the market and there is a scope for a move higher to $2,000.
• If Gold price bears commit, then we could see a 50% mean reversion area hold the fort around $1,992 and a subsequent sell-off from there. 

Gold price is robust on Monday as the US Dollar and US Treasury bonds yields fell. Precious metals on Monday recovered from early losses and posted moderate gains. A drop in the US Dollar index printed a 1-week low due to a larger-than-expected increase in the German Apr IFO business climate index and hawkish comments Monday from European Central Bank Governing Council member Pierre Wunsch set off a rally in EUR/USD.

The German Apr IFO business climate index rose +0.4 to a 14-month high of 93.6, stronger than expectations of 93.4. Wunsch said we are "not seeing" inflation going in the right direction yet, and the ECB will only agree to halt interest rate increases once wage growth starts to fall. "We are waiting for wage growth and core inflation to go down, along with headline inflation, before we can arrive at the point where we can pause," the official said. 

Meanwhile, the weaker dollar, making the precious metal more affordable for international buyers, offered support. DXY, an index that measures the currency vs. a basket of others was down 0.37/ and fell from a high of 101.9090  to a low of 101.330. Bond yields, bullish for gold since it offers no interest were lower with the US two-year note was  paying as low as 4.097% on the day.

Gold technical analysis

That is a daily head and shoulders, a topping pattern forming at the end of the bullish cycle.

Zoomed in, we can see how things could play out.

While below the Fibonacci scale´s 78.6%, the bias is bearish, especially while being on the front side of the trendline resistance. 

A deeper look into the right-hand shoulder, on the 4-hour time frame, we can see that the price has broken the micro trendline resistance that would now be expected to act as a counter-trendline. This leaves scope for as move higher into the bearish impulse to target towards $2,000. However, if bears commit, then we could see a 50% mean reversion area hold the fort around $1,992 and a subsequent sell-off from there.