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Gold Price Analysis: Key levels to watch ahead of Fed, upside still favored – Confluence Detector

Gold (XAU/USD) treads water around $1950, as the bulls turn cautious in the run-up to the Fed showdown. The dovish Fed expectations amid coronavirus-led economic risks and US fiscal stand-off keep the upside favored in the yellow metal.

The buyers, however, await a fresh impetus for the next push higher, especially after a volatile session seen on Tuesday. Gold rallied to life-time highs of $1981.34 before correcting sharply to $1907. The bulls fought back control, as the price settled the day above $1950 levels.

The risk trends continue to remain in play amid a broadly subdued US dollar, as it wallows near two-year lows across its main competitors and lends support to the precious metal.  Let’s look at the Technical Confluences Indicator to gauge how the metal is positioned heading into the Fed decision.

Key resistances and supports

The tool shows that the bright metal is on track to test the powerful support aligned at $1937, where the pivot point one-month R3, pivot point one-week R1 and Fibonacci 61.8% one-day converge. That level will be a tough nut to crack for the sellers.

Ahead of that key support, the bears could test the downside cushion at $1943, which is the confluence of the SMA10 four-hour and SMA50 one-hour.

To the upside, the Fibonacci 38.2% one-day hurdle at $1954 offers immediate resistance. Acceptance above the latter will open doors towards $1964. The Fibonacci 23.6% one-day.

Buyers will then aim for $1972, the intersection of the Bolling Band one-hour Upper and pivot point one-week R2, en route the record highs of $1981.34 reached on Tuesday.

The path of least resistance appears to the upside amid dovish Fed expectations.

Here is how it looks on the tool

About the Confluence Detector

The TCI (Technical Confluences Indicator) 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.

Learn more about Technical Confluence

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


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