Gold Price Forecast: XAU/USD holds steady above $1,785 level, lacks follow-through

Update: Gold maintained its bid tone through the first half of the European session, albeit lacked any strong follow-through buying. Currently trading just above the $1,785 region, the repricing of the likely timing of the Fed's tapering plan pulled the US dollar further away from multi-month tops touched on Friday. This was seen as a key factor that provided a modest lift to dollar-denominated commodities, including gold.

Worries that the surge in new COVID-19 cases could lead to a global economic slowdown forced investors to scale back their expectations that the Fed will begin tapering its asset purchases sooner. This, in turn, prompted some USD profit-taking, though a generally positive tone around the equity markets capped gains for the safe-haven gold. The risk-on impulse in the markets was reinforced by a goodish pickup in the US Treasury bond yields, which was seen as another factor that held traders from placing aggressive bets around the non-yielding yellow metal.

Investors also seemed reluctant, rather preferred to wait on the sidelines ahead of the Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this week. Powell's comments will be closely scrutinized for clues about the Fed's policy outlook and provide a fresh directional impetus to gold. This might further collaborate to cap gains for the XAU/USD, making it prudent to wait for some strong follow-through buying before positioning for any further appreciating move.

Previous update: Gold is holding the higher ground, attempting another run towards the $1800 mark heading into the all-important Fed’s Jackson Hole Symposium this week. The risk-on-market mood remains the main underlying theme starting out a fresh week, weighing on the safe-haven US dollar. Investors take note of the Fed event going virtual, which temper the tapering expectations bolstered by the FOMC minutes. Meanwhile, the looming Delta covid variant threat on the global economic recovery lifts the yellow metal’s safe-haven appeal.

Ahead of the Jackson Hole Symposium, gold price will continue to track the US dollar price action and the broader market sentiment for fresh trading impetus. Key US macro data will also draw attention for fresh gold trades.

Read: FOMC minutes stole some of Jackson Hole's thunder

Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold has regained the powerful resistance now turned support at $1784, which is the intersection of the Fibonacci 61.8% one-day, SMA10 four-hour and SMA50 one-hour.

Therefore, the next critical resistance is now seen at the confluence of the Fibonacci 61.8% one-month and Bollinger Band 15-minutes Upper at $1793.

The buyers will then target the $1795 supply zone, which is the meeting point of the previous week’s high, pivot point one-week R1 and SMA200 four-hour.

Acceptance above the latter will clear the path towards the $1800 round figure, above which the doors will open up for a test of the 1808 resistance.

That level is the convergence of the Fibonacci 38.2% one-month, pivot point one-week R2.

Meanwhile, if the abovementioned crucial resistance turned support at $1784 caves in, then a drop towards $1775 (pivot point one-month S1) is inevitable.

The confluence of the SMA200 one-hour and Fibonacci 161.8% one-day at $1772 could be on the sellers’ radar.

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.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.