- The price of gold extends the rebound amid a sharp correction in the US dollar.
- Profit taking engulfs the USD towards the Fed and NFP next week.
- $1,890 appears as strong support for XAUUSD while $1,927 guards the upside.
The month-end flows combined with profit taking triggered a sharp correction in the US Dollar against its main rivals, helping the price of gold recover significant ground above the $1,900 mark. Investors are unwinding USD buying ahead of next Wednesday’s critical Fed rate hike decision, with the 50bp hike well priced in. The rebound in the price of gold, however, appears shallow as the dollar will continue to capitalize on the Fed’s aggressive rate hike. expectations, despite the poor impression of US GDP in the first quarter.
Read also: Gold Price Forecast: XAUUSD Rebound – A Good Sell Opportunity?
Gold price: Main levels to watch
The technical confluence finder shows that the price of gold is running into strong resistance near $1,918 on its way to recovery.
A sustained break above the latter will put the four-hourly SMA50 at $1,923 to test, above which the confluence of the previous week’s low and the one-day R3 pivot point at $1,927 will challenge the additional increase.
Alternatively, if the rallying momentum falters, sellers could again target the one-day R2 pivot point at $1,913.
The next relevant support awaits around $1,905, where a dense group of support levels comprising the S1 one-week pivot point, SMA5 one day, and R1 one-day pivot point converge.
The previous day’s high at $1,898 will be tested on the downside. The last line of defense for the XAU bulls lies at $1,890, the intersection of the 1-day Fibonacci 23.6%, the previous month’s low, and the four-hour SMA10.
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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.