- The price of gold is showing a corrective bounce on the way to a three-week downtrend.
- Cautious sentiment amid looming US debt ceiling expiration, key US data allows USD to retreat, supporting XAU/USD rebound.
- Upbeat US data, hawkish Fed concerns join hopes that there will be no US default despite all the drama, keeping gold bears hopeful.
Gold (XAU/USD) pared weekly losses to the lowest levels in two months as markets await key data from the US as well as a debt ceiling deal. The precious metal’s latest rally could be linked to the US dollar retreating from a multi-day peak as the latest headlines suggest policymakers still have significant margins to narrow to avoid a US default. Even so, revised real GDP and US activity data are supporting hawkish hopes around the Federal Reserve, despite mixed comments from officials of late, which in turn is putting downward pressure on XAU/USD.
Negotiations on the US debt ceiling will be critical to gauge market movements as the early June deadline approaches. Additionally, US durable goods orders for April and the Core Personal Consumption Expenditure (PCE) price index for that month, known as the Fed’s preferred gauge of inflation, should be closely watched for clear guidance.
Also read: Gold Price Forecast: XAU/USD Tracks US PCE Inflation and Weekly Close Below 100 DMA
Gold Price: Key Levels to Watch
According to the out Technical Confluence Indicator, the price of gold is grinding within a short-term trading range around multi-day lows.
This means that $1,943 appears to be a key support for the XAU/USD bearish re-entry as it contains a number of technical indicators, namely the one-month S1 Pivot Point, the previous four-hour (4H) high, and the middle Bollinger Band on the 15-minute time frame.
After that, the lower Bollinger band on the 1-day and 4-hour time frame, around $1,938, can act as a last line of defense for gold buyers.
It should be noted that the 23.6% Fibonacci convergence on the 1-day and Pivot Point-weekly S1 limits the immediate downside of XAU/USD near $1,945.
Meanwhile, recovery moves need confirmation from the previous monthly low around $1,951.
In case the price of gold remains firmer above $1,951, the possibility of witnessing a run to the $1,967 barrier comprising the 100-HMA, 5-DMA and the previous daily high cannot be ruled out.
Due to XAU/USD Fibonacci at 23.6% for the week around $1,971 may try to defend the castle with one hand.
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About the technical coincidence detector
TCD (Technical Confluences Detector) is a tool to find and show price levels where congestion occurs indicatorsmoving averages, Fibonacci levels, Pivot Points, etc. If you are a short-term trader, you find entry points for countertrend strategies and hunt for a few points at a time. If you are a medium to long term trader, this tool allows you to know in advance the price levels where the medium to long term trend can stop and rest, where to unwind positions or where to increase your position size
