Gold (XAU/USD) is consolidating near four-day highs but remains below $1800 so far this Thursday. Fed Chair Jerome Powell’s dismissal of tapering bets gave the much-needed boost to the XAU bulls. Meanwhile, US President Joe Biden pushed for his $1.8 trillion stimulus package, which exerted additional upside pressure on gold.
The US Treasury yields fell across the curve amid expectations of prolonged policy support from both the government and the central bank, supporting the non-yielding gold. Let’s how gold’s technical graphs are aligned ahead of key US economic data.
The Technical Confluences Detector shows that gold’s path of least resistance appears to the upside, as a dense cluster of healthy support levels is lined up around $1780-$1775.
The zone is the confluence of the SMA50 four-hour, Fibonacci 61.8% one-week, Fibonacci 23.6% one-day and SMA10 one-day.
Ahead of this cushion, the XAU bears could test the immediate support at $1783, the Fibonacci 38.2% one-week.
Immediate resistance awaits at $1773-$1774, the confluence of the SMA10 one-day and pivot point one-day S1.
Further south, the Fibonacci 61.8% one-day at $1770 could be the next target for the sellers.
However, if the bullish momentum resumes, the XAU bulls could likely take on the $1791 barrier, which is the convergence of the Fibonacci 23.6% one-week and the pivot point one-day R1.
The next stoppage is seen at the intersection of the pivot point one-day R2 and pivot point one-week R1 at $1796.
The next key level for gold traders is the $1800 mark that needs to be scaled on a sustained basis to extend the Fed-led upside.
Around that point, the previous week high coincides with the pivot one-month R2.
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.
