Gold price is building on the previous recovery momentum, reversing the dip seen earlier in the Asian session. Markets are duplicating Monday’s moves, as the US dollar correction kicks in again amid a renewed weakness in the Treasury yields, allowing bulls to regain the upside traction. The extended risk rally globally is on the heels of expectations of more Chinese stimulus, inflation peaking in the US and some optimism surrounding Ukraine’s progress against Russia. All eyes now remain on the US inflation data for August, which will provide a fresh cue on the Fed’s rate hike path, with the world’s most powerful central bank seen hiking rates by 75 bps next week. An upside surprise in the core CPI could be on the cards, given the lower consensus.
Also read: Gold Price Forecast: XAU/USD could attack $1,700 on a US core CPI upside surprise
The Technical Confluence Detector shows that the gold price is looking to break above the convergence of the previous week’s high and Fibonacci 23.6% one-day at $1,729.
Next on tap for bulls is a dense cluster of healthy resistance levels stacked up around $1,735, where the Fibonacci 23.6% one-month, pivot point one-week R1 and the previous day’s high meet.
Buying pressure will accelerate above the latter, initiating a fresh upswing towards the SMA 50 one-day at $1,742.
On the flip side, the immediate support is seen at around $1,721, the confluence of the Fibonacci 23.6% one-week, Fibonacci 61.8% one-day and the previous low four-hour.
The Fibonacci 38.2% one-week at $1,716 will come to the rescue of bulls if the downside extends. The last line of defense for XAU buyers is envisioned at $1,712. At that level, the previous day’s low, SMA10 one-day and pivot point one-day S1 merge.
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.
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EUR/USD is extending losses towards 0.9950 in early European trading. The US dollar recovery is gaining traction amid a cautious tone, as investors reassess aggressive Fed tightening bets amid looming recession risks. Hawkish ECB-speak fails to rescue EUR bulls.
GBP/USD is trading on the back foot below 1.1400, amid holiday-thinned market conditions and broad US dollar strength. The UK markets are closed in observance of the Queen's funeral. Investors brace for the Fed and BOE bonanza this week.
Gold has witnessed a vertical fall after failing to overstep the critical resistance of $1,680.00 in the Asian session. The precious metal is eyeing more losses as an intraday inventory distribution is indicating the resumption of a downside journey ahead.
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