XAU/USD breaches key $1,813 support amid USD pullback – Confluence Detector

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  • Gold breaks the two-day downtrend, refreshes the intraday high at the latest.
  • DXY fades bounce off early November lows during US holidays.
  • Virus issues, concerns about Fed rate hikes remain, but China is trying to stay positive.
  • $1,821 acts as an immediate hurdle, the bears have a bumpy road back.

Gold (XAU/USD) renews its intraday high around $1,820, up 0.20% on a day ahead of Monday’s European session. In doing so, the yellow metal encourages US Dollar weakness, as well as mixed sentiment in the markets, to prevent the rebound from the key support confluence.

That said, the US Dollar Index (DXY) fails to extend the previous day’s U-turn from the lows since Nov. 10, down 0.02% intraday to refresh the lows. daily at 95.14 at press time. On Friday, the greenback gauge cheered hints of faster rate hikes, largely due to the negative effects of the virus on inflation. San Francisco Federal Reserve Chair Mary Daly said the latest Omicron wave will extend the period that inflation will remain high. The Fed’s Daly also signaled that officials “are going to have to adjust their policy.” In a similar vein, Federal Reserve Bank of New York President John Williams said the Fed is nearing a decision to start raising interest rates.

Elsewhere, Beijing in China is tightening the rule for entering the capital after a jump in covid cases while Japan is also discussing increased virus-related restrictions for Tokyo over witnessing more than 20,000 daily infections for the third consecutive day.

It should be noted, however, that China’s firmer fourth-quarter GDP and hopes for a faster economic recovery, as conveyed by the head of the National Bureau of Statistics (NBS), Ning Jizhe, seem to defy the bears. On the same line could be the recent decline in virus numbers from Australia, the UK and the US.

It’s worth noting that a drop for US banks limits moves in Treasuries and allows markets to consolidate Friday’s performance. However, Omicron’s woes and Fed rate hike fears could keep gold prices under pressure, even if technical confluence signals otherwise.

Read: Weekly Gold Forecast: Bulls to Take Action with a Break Above $1,830

Gold price: Main levels to watch

the Technical Confluence Detector shows that the price of gold remains firmer beyond the key support of $1,813 comprising the lower 1-hour Bollinger Band, 23.6% Fibo. on the monthly and the lower four-hour Bollinger Band.

However, a middle band of the four-hour Bollinger Band joins the 1-day Fibonacci 38.2% and SMA 10 on the four-hour chart to shield the immediate rise in quotes around $1,821.

After that, a smooth climb towards the $1,831 hurdle cannot be ruled out. Reported resistance includes the previous monthly high.

Meanwhile, a break down of the $1,813 support will point gold sellers towards the $1,810 mark, including 4H SMA 50, 1H SMA 200 and 1D SMA.

In an event gold prices remain low above $1,810, Fibonacci 61.8% one week and Pivot Point 2 1-day support will act as an additional downside filter around $1,805 before directing the quotation towards the $1,800 threshold, also including 38.2% Fibo. a month.

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About the Technical Confluence Detector

The TCD (Technical Confluences Detector) is a tool for locating and signaling price levels where there is congestion of indicators, moving averages, Fibonacci levels, pivot points, etc. If you are a short-term trader, you will find entry points for countertrend strategies and chasing a few points at a time. If you are a medium-long term trader, this tool will allow you to know in advance the price levels where a medium-long term trend can stop and rest, where to unwind positions, or where to increase your post size.

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