Gold Price Forecast: XAU/USD stays poised to extend recovery

Update: Following Wednesday's decisive rebound, the XAU/USD pair fluctuated in a tight range before closing flat a little above $1,750 on Thursday. Although gold managed to continue edge higher during the European trading hours on Friday, it seems to be struggling to gather bullish momentum. Nevertheless, the pair clings to modest daily gains and was last seen rising 0.38% at $1,759.50. Later in the session, the University of Michigan's preliminary August Consumer Sentiment Index data, which is expected to remain steady at 81.2, from the US will be looked upon for fresh impetus but the trading action is likely to remain subdued ahead of the weekend.

Gold price is easing back towards $1750, having refreshed four-day highs at $1760 in the last hours. Despite the minor pullback, the bullish potential in gold price remains intact amid the ongoing weakness in the Treasury yields, which remains a drag on the US dollar. The returns on the market sag, as investors turn cautious amid the continued spread of the Delta covid variant cases and uncertainty over the Fed’s next monetary policy move. Softer US CPI and upbeat PPI data have left the markets in limbo, given the recent expectations about the Fed’s tapering. Looking ahead, the US Preliminary UoM Consumer Sentiment could provide fresh hints on the economy, impacting the USD valuations, in turn, gold.

Read: US Consumer Sentiment Preview: Payrolls, inflation and the pandemic

Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold tested the powerful resistance at $1760, which is the convergence of the previous week’s low and Bollinger Band one-hour Upper.

Acceptance above the latter is needed to take on the immediate resistance at $1762, the pivot point one-day R1.

The next significant upside target is envisioned at $1767, the previous month’s low, around where the pivot point one-day R2 coincides.

Alternatively, bears need to find a strong foothold below the fierce support at $1754, the confluence of the Fibonacci 23.6% one-day, SMA5 four-hour and the previous low four-hour.

Sellers will then aim for the $1750 support area, where the Fibonacci 38.2% one-day meets the SMA50 one-hour.

Further south, the intersection of the Fibonacci 61.8% one-day and Bollinger Band one-hour Lower at $1748 guards the downside.

A dense cluster of support levels around $1744 could then test the bearish commitments.

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.