Having found strong support at $1700 on Friday, Gold (XAU/USD) is looking to extend the bounce this Monday amid fears about a potential rise in inflation, thanks to the massive US $1.9 trillion stimulus. However, the reflation trade-backed fresh lift in the US Treasury yields keeps the gains in check.
The benchmark 10-year rates on the US Treasuries are back above 1.60%, as we head into the FOMC week, with investors awaiting President Joe Biden’s COVID-149 rescue plan for fresh impetus. In the meantime, the focus will continue to remain on the Treasury yields.
How is gold positioned on the technical graphs?
Gold Price Chart: Key resistance and support levels
The Technical Confluences Detector shows that gold is looking to recapture the previous week high at $1740 amid a lack of healthy resistance levels.
Above that level, the XAU bulls would test the confluence of the Fibonacci 161.8% one-day and pivot point one-day R2 at $1747.
An immediate cap around $1751 could challenge the bullish commitment, where the pivot point one-week R1 is placed.
The next relevant barrier is seen at $1754, the Fibonacci 23.6% one-month.
To the downside, if the selling pressure resumes, gold could drop below the immediate cushion seen at $1723.50, which is the confluence of the Fibonacci 23.6% one-week, the previous low on four-hour and SMA10 one-hour.
The bears need to crack crucial support at $1720/$1717 to unleash the downside. That level is the meeting point of the Fibonacci 61.8% one-day, the previous month low and Fibonacci 38.2% one-week.
The convergence of the SMA10 and 5 one-day at $1713 would limit the losses. Sellers would then aim for the $1705 support, where the Fibonacci 23.6% one-day coincides with the pivot point one-day S1.
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.
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