Update: Gold struggled to capitalize on its intraday positive move, instead met with some fresh supply in the vicinity of the $1,800 round-figure mark. The US dollar built on the post-FOMC rally and shot to over two-month tops. This, in turn, was seen as a key factor that undermined demand for dollar-denominated commodities, including gold.
It is worth recalling that the Fed took a sudden hawkish turn on Wednesday and brought forward its projections for the first post-pandemic interest rate hikes to 2023. The Fed also indicated that it will soon work on tapering down the current $120 billion in monthly bond purchases. This was seen as another factor weighing on the non-yielding gold.
That said, a combination of factors might help limit any deeper losses for the XAU/USD, at least for the time being. Currently hovering around the $1,775 region, the ongoing decline in the US Treasury bond yields might extend some support to the non-yielding yellow metal. Apart from this, a fresh leg down in the equity markets might further hold traders from placing any aggressive bearish bets around the safe-haven gold.
Nevertheless, the commodity remains on track to end the week with heavy losses and remains vulnerable to slide further. Sustained weakness below the overnight swing lows, around the $1,768-67 region, will reaffirm the bearish bias and prompt some aggressive technical selling. The next relevant support is pegged near the $1,755 horizontal level before gold eventually drops to the $1,725-20 region.
Previous update: Gold price is rebounding over 1% on the last day of this eventful week, although remains on track to book a 5% loss on the weekly basis. The retreat in the US Treasury yields is boding well for gold price, as it recoups a part of the Fed-led blow. Earlier this week, the Fed unexpectedly turned hawkish and signalled two rate hikes in 2023, which weighed negatively on non-yielding gold. Meanwhile, the US dollar index clings onto two-month highs heading into the weekly closing.
Gold price is likely to remain influenced by the dynamics in the yields and the dollar and a light economic calendar. Broader market sentiment amid quadruple witching will also impact gold price.
Gold Price: Key levels to watch
The Technical Confluences Detector shows that gold price is staging a decent comeback towards the $1797 resistance area, where the Fibonacci 61.8% converges with the SMA10 four-hour.
Further up, the bulls will challenge the $1800 round number.
The confluence of the pivot point one-month S1 and pivot point one-day R1 at $1811 will then emerge as a strong upside hurdle.
Alternatively, a bunch of minor support levels offers immediate support around $1789, which is the intersection of the Fibonacci 38.2% one-day and the Bollinger Band one-hour Upper.
The next relevant support is seen at $1781, the meeting point of the Fibonacci 23.6% one-day, SMA5 four-hour and SMA10 one-hour.
The previous low on the four-hour at $1776 remains the last hope for the gold bulls.
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.