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

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.