Gold Price Analysis: XAU/USD’s path of least resistance is down as King dollar rules – Confluence Detector

Dhwani Mehta FXStreet

Gold (XAU/USD) is set to book the first weekly decline in three weeks, as the US dollar holds firmer near multi-month highs amid economic optimism. Recent series of upbeat US macro data combined with faster vaccine rollouts bolster expectations of quick economic recovery.

Higher Treasury yields amid hopes of additional US stimulus also offer support to the greenback, which weighs on the non-yielding gold. Looking ahead, gold traders gear up for another data-heavy US docket.

Let’s take a look at the key technical levels for trading gold ahead?

Gold Price Chart: Key resistance and support levels

The Technical Confluences Detector shows that gold wavers near-daily lows, looking to attack the critical support at $1717, the confluence of the previous week and month lows.

The next downside target awaits at $1703, the pivot point one-week S2, below which the Fibonacci 161.8% one-week could be tested.

Further south, the sellers will aim for a $1692 cap, the intersection of the pivot point one-day S3 and Bollinger Band one-day lower.

The XAU bulls are likely to face an uphill battle, with a dense cluster of healthy resistance levels stacked up around $1730-35 region. That confluence zone comprises of SMA10 one-day, Fibonacci 61.8% one-week and SMA200 one-hour.

The convergence of the previous day high and Fibonacci 38.2% one-week at $1745 will be a tough nut to crack for the XAG bulls.

Powerful resistance at $1756, the meeting point of the previous week high and SMA200 four-hour, could the next relevant upside target.

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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