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Gold (XAU/USD) is nursing losses on Wednesday, having borne the brunt of the broad-based US dollar rebound after the US ISM Manufacturing PMI revived hopes of some improvement in the economic recovery. The recovery in the Treasury yields combined with the record highs on Wall Street dampened the demand for the non-yielding gold.

Gold now awaits the critical US ADP jobs report for a fresh direction, especially after the ISM Manufacturing Employment Index remained in contraction last month. Looming US-Sino tensions could also draw some attention.

How is gold positioned technically?

Gold: Key resistances and supports

The tool shows that gold faces a strong cap at $1970, the convergence of the SMA10 one-hour and Bollinger Band four-hour Middle.

Acceptance above the latter will call for a test of minor resistance at $1975, where the Fibonacci 61.8% one-day and SMA5 on four-hour coincide.

The next relevant barrier is aligned at $1977, the previous week high. A fresh rally could be triggered on a break above the latter, opening doors for a test of the two-week highs of $1992.42.

Alternatively, an immediate cushion at $1959 limits the downside. That level is the confluence of the previous low on four-hour and Fibonacci 23.6% one-week.

The SMA5 one-day support at $1957 will be next on the sellers’ radar. Should the bulls fail to defend the latter selling pressure will likely intensify.

The robust support at $1949, the confluence of the SMA50 four-hour and Fibonacci 38.2% one-week, will guard the downside.

Here is how it looks on the tool


About the 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.

Learn more about Technical Confluence

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