Gold Price Analysis: Risks remain skewed to the downside for XAU/USD amid reflation trade – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) licks its wounds near two-week troughs below $1800, overwhelmed by the surge in the US Treasury yields, as investors dumped the safe-haven US bonds amid the revival of the reflation trades.

With more US fiscal stimulus coming in alongside vaccine optimism, the expectations for higher global inflation drove the benchmark 10-US Treasury yields to the highest levels since February 2020. Attention turns towards the US Retail Sales data and the FOMC minutes for fresh near-term trading opportunities in gold.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold remains capped below the $1796 barrier, which is the convergence of the previous high four-hour and Bollinger Band one-day Lower.

Further up, $1803 will test the bullish commitments. That level is the intersection of the previous month low, Fibonacci 38.2% one-day and SMA5 four-hour.

The next relevant hurdle awaits at the previous week low of $1808. The XAU bulls are likely to face an uphill task on the road to recovery towards $1822, where the SMA5 and 10 one-day coincide with the SMA100 one-hour.

If the selling momentum resumes, the spot could drop to test the previous day low at $1790, below which fierce support at $1781 would be put at risk.

The pivot point one-month S1 at $1777 could be next on the sellers’ radars.

Here is how it looks on the tool

About Confluence Detector

The TCI (Technical Confluences Indicator) 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.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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