Gold Price Analysis: XAU/USD eyes critical $1862 resistance ahead of Biden’s inauguration – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) is advancing above the 200-day SMA, as the US inflation expectations continue to rise, in anticipation of a massive stimulus package under the incoming Biden administration. Stimulus expectations boost gold’s appeal as an inflation-hedge while downing the safe-haven US dollar.

Treasury Secretary nominee Janet Yellen’s backed President-elect Biden’s view for higher fiscal spending, noting that its benefits outweigh the expenses of a higher debt burden. Biden’s inauguration speech is eagerly awaited for fresh hints on the stimulus plan.

How is gold positioned on the technical charts?

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold has some additional room to the upside, with the immediate resistance seen at $1858. That level is the confluence of the SMA10 one-day and Fibonacci 38.2% one-month.

After crossing a dense cluster of mino9r resistance levels, the XAU bulls may run through strong offers at $1860/62, which is the SMA50 one-day.

The previous week high at $1864 is the level to beat for the gold buyers.

On the flip side, acceptance under the critical support around $1847/46 is needed to invalidate the recovery momentum. The Fibonacci 61.8% one-week intersects with the SMA200 one-day and the previous day high at that point.

The next relevant support awaits at $1840, which is the convergence of the SMA10 four-hour, SMA5 one-day and the previous low four-hour.

The sellers will then target the Fibonacci 38.2% one-week at $1835, below which the $1829 (Fibonacci 23.6% one-week) support will challenge the bears’ commitment.

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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