Gold Price Forecast: XAU/USD eyes $1797 and $1789 as the next downside targets – Confluence Detector

Gold price snapped its recovery mode and resumed its downtrend, now flirting with fresh monthly lows just above $1800. Resurgent supply in the European session prompted another downswing for gold price, as the dead cat bounce witnessed earlier in the Asian trades vanished.

The European traders hit their desks and reacted to Wednesday’s US Federal Reserve’s (Fed) hawkish surprise, fuelling a fresh leg up in the US dollar across the board. The Fed hinted a sooner-than-expected rate hike while keeping tapering expectations alive. The US dollar index jumped from 91.33 to 91.76 after the Asian consolidation, hitting fresh two-month highs. However, the US Treasury yields remain on the defensive, although hold onto the post-FOMC rally, keeping the bearish pressures intact on gold price.

The Fed-induced blow on gold price is likely to have a lasting impact, as attention now turns towards the US weekly Jobless Claims data for fresh trading impetus.

Read: Gold Price Forecast: ‘Buy the dips’ rescues XAU/USD after the Fed-blow, but for how long?

Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold price is challenging the critical support around $1802, the convergence of the previous day low and Bollinger Band 15-minutes Lower.

Sellers remain poised to test the key SMA100 one-day at $1797 is the latter caves in.

The next downside target is aligned at the pivot point one-day S1 of $1789.

However, if the $1800 round number holds up, a bounce-back towards $1810 could be in the offing. That level is the pivot point one-month S1.

Gold bulls will then flex their muscles to probe $1817, the intersection of the SMA10 one-hour and Fibonacci 23.6% one-day.

Recapturing $1822 is critical to negate the bearish momentum in the near term. The powerful resistance is the confluence of the Fibonacci 61.8% one-month and the previous high four-hour.

Here is how it looks on the tool       

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.