Gold Price Analysis: Battle lines well-defined for XAU/USD amid pre-Fed caution – Confluence Detector

Gold (XAU/USD) is trading with mild gains on Tuesday, trying hard to extend the previous gains to recapture the $1740 level. Gold finds support from the retreat in Treasury yields while the US dollar, with all eyes focussed on the FOMC decision due on Wednesday.

Investors mark time as the two-day Fed policy meeting begins later this Tuesday. The pre-Fed caution could likely keep gold in a familiar range. The Fed is likely to stand pat on its monetary policy but its take on the recent yield surge will be closely followed.

In the meantime, let’s take a look at the key technical levels for trading gold ahead.

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold hovers below the previous week high at $1740, as that level sees a dense cluster of resistance.  

A firm break above that level could see a test of $1745, which is the Bollinger Band one-day Middle.

Further up, the confluence of the pivot point one-day R3 and pivot point one-week R1 at $1950 could challenge the bullish commitments.

The next relevant barrier awaits at $1754, the Fibonacci 23.6% one-month.

If the bulls fail to hold onto its break above $1740, the sellers could fight back control, knocking-off gold prices towards $1732, where the Fibonacci 38.2% one-day coincides with the SMA5 four-hour and the previous low four-hour.

A stack of healthy support levels is seen around $1725, which is the convergence of the Fibonacci 23.6% one-week and pivot point one-day S1.

Powerful support at $1717 is the level to beat for the XAU bears. That level is the intersection of the previous month low, Fibonacci 161.8% one-day and SMA10 one-day.

Here is how it looks on the tool

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.