Gold (XAU/USD) consolidates Wednesday’s 1.30% rally in the lead up to the much-awaited Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Thursday. The US dollar drops with Treasury yields amid dovish Fed expectations, with markets expecting Powell to hint at a new policy framework to resolve its persistent fight with low inflation.
Meanwhile, the renewed US-Sino tensions over the South China Sea dispute combined with growing fears of the second-wave of coronavirus underpins the safe-haven appeal of gold. Ahead of Powell’s speech, traders will await fresh cues from the US Q2 Preliminary GDP release. Let’s look at the key technical levels for trading gold in the day ahead.
Gold: Key resistances and supports
The tool shows that gold wavers in a tight range, with a cluster of minor support levels stacked up between $1940-35, keeping the retracement in check. The demand zone is the confluence of the Fibonacci 23.6% one-week, Fibonacci 38.2% one-day and SMA5 one-day.
A breach of that area could see a test of the critical support at $1932, where the Fibonacci 23.6% one-month and SMA50 one-hour coincide.
The next downside support awaits at $1923, the Fibonacci 61.8% one-day. The pivot point one-day S1 at $1920 is another cushion to the downside.
Meanwhile, the bulls need a decisive break above the fierce $1952 barrier, the intersection of the Fibonacci 38.2% one-week, SMA10 one-day and SMA50 four-hour, to revive the recent bullish momentum.
The next hurdle is seen at $1956, the convergence of the previous high and Bollinger Band four-hour Upper.
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.