Gold Price Analysis: Defending $1731 support is critical for XAU/USD amid firmer dollar – Confluence Detector

Gold (XAU/USD) is on a steady decline so far this Monday, undermined by a broad-based US dollar recovery. Surging covid infections and vaccine delays in some of the major global economies dampen the investors’ sentiment and lift the haven demand for the greenback. Further, an upbeat take by Fed Chair Jerome Powell on the economy buoy the US dollar.

However, rising inflation expectations, in light of stronger US PPI data, could offer some support to gold, the hedge-against-inflation. Meanwhile, the dynamics in the yields will be closely watched ahead of the US CPI release due later this week.

Let’s take a look at how gold is positioned on the technical graphs.

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold is eyeing key support at $1731, the confluence of the previous day low, Bollinger Band four-hour Lower and the pivot point one-day S1.

Further south, the convergence of the SMA10 one-day and Fibonacci 61.8% one-month at $1729 could be put at risk.

The previous week low at $1721 will be the last line of defense for the XAU bulls.

Alternatively, recapturing the $1742 hurdle is critical to reviving the upside momentum. That level is the intersection of the Fibonacci 38.2% one-day, SMA5 one-day and SMA10 one-hour.

The next hurdle is seen at $1745, which is the Fibonacci 23.6% one-week. A dense cluster of resistance around $1750 could likely limit the advances.

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.