Gold Price Analysis: XAU/USD needs to crack key $1858 barrier for further upside – Confluence Detector

After four straight down sessions, Gold (XAU/USD) looks to extend its recovery above $1850, benefiting from growing covid concerns globally and expectations of additional US fiscal stimulus.

President-elect Joe Biden is expected to propose a multitrillion-dollar stimulus package on Thursday, reviving the reflation trades, which could set an inflation uptrend. Gold, therefore, draws support as an inflation-hedge.

Meanwhile, markets assess the impact of a stronger US dollar and the rally in Treasury yields amid US political drama and ahead of Fedspeak.

Gold Price Chart: Key resistances and supports

The Technical Confluences Indicator shows that gold readies to take out a powerful resistance at $1858, which is the intersection of the previous day high and Fibonacci 38.2% one-day.

Up next, a dense cluster of major resistance levels is put up around $1861, where the Fibonacci 23.6% one-week, SMA200 four-hour and SMA50 one-hour coincide.

The buyers will then target the SMA50 one-day at $1869.

Meanwhile, a lack of healthy support levels makes gold look vulnerable, with an immediate cushion seen around $1847, which is the convergence SMA10 and 5 one-hour and SMA5 four-hour.

The next critical support awaits at $1840, the meeting point of the SMA200 one-day and Fibonacci 61.8% one-day.

Further south, the previous week low at $1828 could guard the downside should the $1833 (Fibonacci 38.2% one-day) support give way.

Here is how it looks on the tool

About 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.

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