Gold Price Analysis: XAU/USD’s path of least resistance appears down, eyes on Powell, Biden – Confluence Detector


Gold (XAU/USD) is licking its wounds after tumbling $20 in a quick move earlier in the Asian trades. Reports that a bigger-than-expected US stimulus plan worth $2 trillion is due to be announced by President-elect Joe Biden knocked-off the US Treasuries, fuelling a rebound in the US dollar and Treasury yields.  

The expectations of a higher US fiscal stimulus plan are likely to keep the bounce in the Treasury yields intact. Therefore, the risks remain skewed to the downside in gold in the lead up to the US weekly jobs data and the Fed Chair Powell’s speech. Although a bounce cannot be ruled out after the sharp move to the downside.

Technically, gold faces healthy resistance levels, which again makes the downside more compelling.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold sees major support at $1836, the convergence of the pivot point one-day S2 and Bollinger Band four-hour Lower.

The next powerful support awaits at $1828, which is the confluence of the previous week low, previous low on four-hour and Bollinger Band one-day Lower.

A failure to resist above the last could put the $1825 support at risk. That level is the intersection of the Fibonacci 61.8% one-month and pivot point one-day S3.

On the flip side, immediate resistance is seen around $1842, where a dense cluster of hurdles is lined up. It is the confluence zone of the SMA200 one-day, pivot point one-day S1 and previous high one-hour.

The buyers will then target the $1850 barrier, where the Fibonacci 23.6% one-day lies.

Further up, a relevant barrier at $1853 is likely to be a tough nut to crack for the XAU bulls. It’s the meeting point of the previous high four-hour and Fibonacci 38.2% one-day.

The further upside is going to be an uphill task for the bulls, with multiple strong hurdles in the way towards the $1860 level. The Fibonacci 23.6% one-week coincides with the pivot point one-day R1 at the latter.

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

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 

EUR/USD News

GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 

GBP/USD News

Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures