Gold Price Analysis: XAU/USD bulls face an uphill battle, a dead cat bounce? – Confluence Detector

Gold (XAU/USD) is nursing losses after a sharp $16 drop witnessed in early Asia, as the prices hit the lowest levels since June 2020 at $1710.50. The yellow metal remains in the red for the fourth straight day on Tuesday, as the US dollar continues to draw bids amid strong US ISM Manufacturing PMI and broad risk aversion.

The corrective declines in the US Treasury yields and US stimulus optimism fail to rescue the XAU bulls. Although the bounce in gold could extend if the sell-off in the yields accelerate amid intensifying risk-off mood, which could drag the greenback lower.

How is gold positioned technically?

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold is likely to run into fresh offers at $1717 on its road to recovery. That level is the confluence of the previous month and week low.

The next barrier awaits at the previous day low of $1720, above which the convergence of the SMA5 four-hour and Fibonacci 23.6% one-day at $1729 would guard the upside.

The XAU bulls need to crack the powerful resistance at $1735, the intersection of the Fibonacci 38.2% one-day and SMA10 four-hour, in order to extend the corrective upside from eight-month lows.

Meanwhile, the level to beat for the bulls is located at $1755, where the Fibonacci 38.2% one-week coincides with the Fibonacci 23.6% one-month.

To the downside, if the bearish momentum gathers steam, the multi-month troughs at $1710.50 could be challenged.

The next significant support is seen at $1690, the pivot point one-week S1. Further south, the pivot point one-month S1 at $1673 would be the last line of defense for the XAU bulls.

Here is how it looks on the tool

About Technical Confluences Detector

The TCI (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.