Gold Price Analysis: XAU/USD braces for a free fall below $1673 – Confluence Detector

Gold (XAU/USD) is wallowing near three-week lows below $1700, undermined by the relentless rise in the US Treasury yields, as investors await the details of the next fiscal stimulus from US President Joe Biden later on Wednesday.

Strengthening US economic recovery and higher inflation expectations continue to drive yields higher, which weigh negatively on the non-interest-bearing gold. Further, broad-based US dollar strength amid quarter-end flows also adds to the bearish pressures on the bright metal.

How is gold positioned on the technical charts?

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold flirting with $1679, which is the convergence of the previous day low and previous low on four-hour.

Minor support at the Bollinger Band four-hour lower of $1676 could limit the declines.

The next significant downside cushion awaits at $1673, the pivot point one-month S1, below which a free fall could be expected towards the $1650 psychological level.  

On the flip side, gold bulls are likely to face an uphill battle on the road to recovery, with immediate upside likely to be capped around $1785, which is the Bollinger Band one-day lower.

Further up, the intersection of the Fibonacci 23.6% one-day and the previous high on four-hour at $1687 could challenge the bullish commitments.

The confluence zone around $1690 will likely be a tough nut to crack for the XAU bulls. At that point, the Fibonacci 38.2% one-day coincides with the Bollinger Band one-hour Upper.

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.