XAU/USD bulls face uphill task below $1,650, Fed eyed – Confluence Detector

  • Gold price is coming up for air as the US dollar falls with Treasury yields.
  • Risk-on flows and position readjustment lead the way ahead of the Fed.
  •  XAU/USD faces a wall of healthy resistance levels around the $1,650 level.

Gold price is seeing a tepid bounce, as the Fed meeting gets underway. Bulls are coming up for the last dance, snapping a three-day decline, as the upbeat market mood and position readjustments in the US dollar lend support to the bright metal. The US Treasury yields are back in the red zone, with the benchmark 10-year rates heading back towards the 4.0% level. Investors brace for the key central bank rate hike decision this week, with the Fed expected to announce a 75 bps rate hike while the BOE is set to hike by 75 bps as well, despite the looming fiscal plan and recession risks. Any recovery attempts in the non-interest-bearing gold price are likely to be sold into aggressive global tightening bets, as central banks struggle to tame raging inflation. A raft of top-tier US economic releases will be also closely followed for fresh hints on the health of the world’s largest economy, which will influence the Fed’s policy decision in the coming months.

Also read: Federal Reserve Preview: Dollar buying opportunity? Why Powell is unlikely to cement a pivot

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price is defending the immediate support at $1,638, the previous week’s low.

A sustained break below the latter will put a bunch of support levels around $1,635 under threat. That price zone is the convergence of the Fibonacci 23.6% one-day, SMA5 four-hour and the previous high four-hour.

The previous day’s low at $1,632 will challenge bullish commitments, opening the downside towards $1,628, where the pivot point one-day S1 coincides with the pivot point one-week S1.

The last line of defense for XAU buyers is seen at the pivot point one-day S2 at $1,723.

Alternatively, strong resistance is aligned at the confluence of the Fibonacci 61.8% one-day and SMA10 four-hour at $1,641, above which the powerful hurdle of $1,645 will be probed. At that point, the pivot point one-day R1 and Fibonacci 23.6% one-month merge.   

Further up, a dense cluster of healthy resistance levels is stacked up around $1,647, the intersection of the SMA200 one-hour, SMA10 one-day and Fibonacci 23.6% one-week.

Acceptance above the latter is critical to take on the next crucial upside barrier placed at $1,652, which is the meeting point of the SMA5 one-day and Fibonacci 38.2% one-week.   

Ahead of that, the $1,650 psychological level will offer stiff resistance on the road to recovery.

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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.


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