Gold Price Forecast: XAU/USD surrenders $2,000 as USD Index recovers – Confluence Detector

Gold price (XAU/USD) has delivered a breakdown of the rangebound structure formed around $2,005.00 in the early European session. The precious metal has dropped below the psychological support of $2,000.00 amid a recovery move in the US Dollar Index (DXY) after a long consolidation.

Investors are channelizing their funds into the US Dollar Index (DXY) Federal Reserve (Fed) policymakers are continuously advocating for more rate hikes and ignoring fears of a recession in the United States economy. Weekly jobless claims data released on Thursday cemented signs of an easing labor market. As per the report, weekly jobless claims increased to 245K, higher than the consensus and the former release of 240K for the week ending April 14.

Going forward, the release of the preliminary US S&P PMI data (April) will be of significant importance. As per the consensus, the Manufacturing PMI will land at 49.0, lower than the former release of 49.2. The Services PMI is also seen lower at 51.5 against the figure of 52.6 released earlier. A consecutive 25 basis point (bp) interest rate hike by the Fed in May seems expected, however, a further slowdown in US economic activities could strengthen the chances of no more rates beyond May.

Also Read: Gold Price Forecast: XAU/USD consolidates above $2,000 as investors await preliminary US S&P PMI

Gold Price: Key levels to watch

A confident move below $2,000.00 which is the confluence of psychological support and 20-period Exponential Moving Average (EMA) on a four-hour timeframe has activated bears. Gold price is preparing for further downside and is likely to find a cushion near the previous week's low at $1,986.00. An absence of a sell-off move by the market participants could send the Gold price to the previous week’s first pivot support at $1,977.50.

Chances of a bullish move for the Gold price would emerge if the Gold price manages to the hourly five-period Simple Moving Average (SMA) at $2,004.50. A sustained move above the same will expose the Gold price to the previous month's high at $2,010.82 followed by a weekly 38.2% Fibonacci retracement at $2,025.37

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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.