Gold Price Analysis: XAU/USD needs to crack key $1858 barrier for further upside – Confluence Detector

Dhwani Mehta FXStreet

After four straight down sessions, Gold (XAU/USD) looks to extend its recovery above $1850, benefiting from growing covid concerns globally and expectations of additional US fiscal stimulus.

President-elect Joe Biden is expected to propose a multitrillion-dollar stimulus package on Thursday, reviving the reflation trades, which could set an inflation uptrend. Gold, therefore, draws support as an inflation-hedge.

Meanwhile, markets assess the impact of a stronger US dollar and the rally in Treasury yields amid US political drama and ahead of Fedspeak.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold readies to take out a powerful resistance at $1858, which is the intersection of the previous day high and Fibonacci 38.2% one-day.

Up next, a dense cluster of major resistance levels is put up around $1861, where the Fibonacci 23.6% one-week, SMA200 four-hour and SMA50 one-hour coincide.

The buyers will then target the SMA50 one-day at $1869.

Meanwhile, a lack of healthy support levels makes gold look vulnerable, with an immediate cushion seen around $1847, which is the convergence SMA10 and 5 one-hour and SMA5 four-hour.

The next critical support awaits at $1840, the meeting point of the SMA200 one-day and Fibonacci 61.8% one-day.

Further south, the previous week low at $1828 could guard the downside should the $1833 (Fibonacci 38.2% one-day) support give way.

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.

Learn more about Technical Confluence

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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