Gold Price Forecast: XAU/USD rebound appears unconvincing below $1,905 – Confluence Detector

Gold Price (XAU/USD) bears take a breather at the lowest levels in five weeks, allowing intraday buyers to stay happy with mild gains amid a sluggish trading day.

The yellow metal’s latest corrective bounce could be linked to a retreat in the US Treasury bond yields and the US Dollar, as well as hopes for China stimulus. That said, the US bond coupons remain pressured after challenging the multi-year high the previous day while the US Dollar Index (DXY) also consolidates the fourth weekly gain in a row as market players brace for the next week’s annual event at the Jackson Hole Symposium where the top-tier central bankers speak.

Elsewhere, China’s second-large realtor, as well as the world's most heavily indebted property developer, Evergrande filed for protection from creditors in a US bankruptcy court on Thursday, per Reuters, which in turn propelled the market’s fears. However, the concerns about Chinese policymakers’ readiness for more stimulus to defend the economy from debt woes seem to have challenged the pessimists and the Gold sellers of late.

To sum up, the Gold Price portrays a dead cat bounce while staying below the key upside hurdle, which in turn keeps the XAU/USD sellers hopeful of witnessing a fresh multi-month low past $1,900.

Also read: Gold Price Forecast: XAU/USD rebounds but 200 DMA appears a tough nut to crack

Gold Price: Key levels to watch

Our Technical Confluence indicator signals that the Gold Price stays well beneath the $1,902 resistance confluence comprising Pivot Point one-day R1 and one-week S1, as well as the upper line of the Bollinger on the hourly play. Also restricting the immediate upside of the XAU/USD is the convergence of the previous monthly low and Thursday’s high of around $1,905.

In a case where the XAU/USD rebound crosses the $1,905 hurdle, the Pivot Point one-day R2, 200-HMA and the upper line of a Bollinger on the four-hour play, close to $1,913, could test buyers.

Following that, the Pivot point one-month S1 around $1,917 will act as the final defense of the XAU/USD sellers.

Meanwhile, the Pivot Point one-week S1 restricts the immediate downside of the Gold price near $1,888, a break of which could drag the commodity to the lower band of the Bollinger on the daily chart, surrounding $1,884.

It should be noted that the Gold Price weakness past $1,884, could quickly drag the XAU/USD toward the Pivot Point one-day S2, near $1,875.

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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.