Gold Price Analysis: XAU/USD risks further falls, eyes $1756 downside target – Confluence Detector

Gold (XAU/USD) nurses losses after hitting fresh seven-month lows at $1761, having the worst start to a year in three decades. The haven demand for the US dollar is back on the rise amid the downbeat market mood, as investors mull the impact of the higher Treasury yields on equity valuations.

The benchmark 10-year Treasury yields hold near yearly highs amid expectations of a bigger US fiscal stimulus, especially in the wake of Treasury Secretary Janet Yellen’s comments.   Meanwhile, an increase in the US weekly jobless claims and mounting fears over the new covid strains cast a dark cloud on the prospects of global economic recovery, lifting the greenback at gold’s expense.

Let’s take a look at how is positioned on the technical graphs.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold is attempting a bounce from multi-month troughs, heading towards the major resistance at $1775, the confluence of the Fibonacci 61.8% one-day and pivot point one-month S1.

The XAU bulls need a firm break above $1780 in order to extend the recovery momentum. That level is the intersection of the SMA5 four-hour, Fibonacci 161.8% one-week and previous high four-hour.

Further up, the buyers are likely to face an uphill battle amid a dense of resistance levels around $1800, above which the previous month low of $1803 could be tested.

On the flip side, immediate support is seen at $1765, where the previous low one-hour coincides with the pivot point one-day S1.

Sellers would then retest the seven-month lows at $1761, opening floors towards $1756. That level is the meeting point of the Fibonacci 161.8% one-day and pivot point one-day S2.

The pivot point one-day S3 at $1747 could be the last line of defense for the XAU bulls.

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.