The reflation trade is back in vogue amid the US stimulus and vaccine optimism-driven brighter outlook for global economic recovery, which continues to boost the Treasury yields at the expense of the yieldless gold (XAU/USD).
The yellow metal also remains undermined by higher premium drawn by the platinum group metals (PGM) amid upbeat demand prospects. Attention turns towards the US Retail Sales and FOMC minutes due later this week for fresh directives. In the meantime, the broader market sentiment will dominate as full markets return this Tuesday.
Let’s look at the key technical levels for trading gold in the day ahead.
Gold Price Chart: Key resistances and supports
The Technical Confluences Indicator shows that gold is attempting a tepid recovery towards 1829, the convergence of the SMA5 one-day, the previous day high and Bollinger Band 15-minutes Upper.
At the press time, the spot is battling the Fibonacci 61.8% one-week level at $1827.
A series of minor resistance levels are aligned around $1834 (Fibonacci 161.8% one-day), which could hinder the recovery mode, as the XAU bulls target the Fibonacci 38.2% one-week at $1837.
Acceptance above the Fibonacci 23.6% one-month at $1840 is needed to be taken on the additional upside.
To the downside, the bulls are defending strong support at $1825, the intersection of the SMA10 one-day, SMA200 one-hour and pivot point one-day R1.
The next cushion awaits at $1823, the Fibonacci 61.8% one-day. Sellers would then target the critical $1820 cap, where the Fibonacci 38.2% one-day and Bollinger Band one-hour Middle would likely guard the downside.
The previous day low of $1816 could be the level to beat for the gold bears.
Here is how it looks on the tool
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.