Gold Price Analysis: XAU/USD looks south towards $1717, Powell’s testimony eyed – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) looks to test the lower bound of the recent trading range, as the US dollar attempts a bounce amid worsening market mood. Rising concerns over the coronavirus surge in Europe, slower vaccines rollout and the West sanctioning China continue to temper the risk sentiment, in turn, boding well for the safe-haven dollar.

Gold failed to benefit from the reports that US President Joe Biden’s advisers are drawing up plans for $3 trillion in new infrastructure spending, The focus shifts to the Fed Chair Jerome Powell’s testimony due later on Tuesday after he said that the economic recovery is still "far from complete," in his speech a day before.

How is gold positioned on the technical charts?

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold is clinging on to strong support at $1733, which is the convergence of the Fibonacci 61.8% one-week, SMA50 four-hour and SMA10 one-day.

The next support awaits at $1731, where the SMA200 one-hour and Fibonacci 23.6% one-day meet.

A test of the previous day low at $1727 would be next on the sellers’ minds, below which the pivot point one-week S1 at $1725 could be tested.

The previous month low at $1717 could be the last resort for the XAU bulls.

On the flip side, the buyers need to find a strong foothold above $1740, which is a powerful resistance, comprising of the Fibonacci 61.8% one-day, SMA5 one-day and SMA10 four-hour.

The XAU bulls could then target $1750, the Fibonacci 23.6% one-week and pivot point one-day R1.

Further up, the Fibonacci 23.6% one-month at $1753 could be back in play.

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.

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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