Gold Price Forecast: XAU/USD eyes a fresh downswing towards $1,650 and Fed minutes – Confluence Detector

• Gold price is challenging critical support at $1,660, with more downside in the offing.
• US dollar cheers risk aversion, Treasury yields rebound while weighing on the metal.
•  XAU/USD gears up for a test of $1,650 on a sustained move below key $1,660 support.

Gold price remains at the mercy of the dynamics of the US dollar and Treasury yields, as investors brace for the key US event risks, in the form of Wednesday’s FOMC minutes and Thursday’s inflation data. The greenback continues to capitalize on persistent risk aversion, fuelled by China’s renewed covid surge, Russia-Ukraine tensions and recession fears. Meanwhile, markets see Fed committed to steeper rate hikes to tame inflation, which is also collaborating with the downside in the non-interest-bearing gold while boosting safe-haven demand for the dollar. Meanwhile, the benchmark 10-year US yields hover around the 4% level, keeping XAU sellers alive. Investors are pricing roughly 83% probability of a 75 bps November Fed rate hike, which is likely to be confirmed by the US inflation release on Thursday. In the meantime, risk trends and the FOMC minutes could influence the dollar, as well as, gold valuations in the near term, as markets watch out for the bond market action.

Also read: Gold Weekly Forecast: XAU/USD remains sensitive to US yields as focus shifts to CPI

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price is yearning for a sustained break below the critical support area at around $1,660, which is the convergence of the previous week’s low, the previous day’s low and Fibonacci 38.2% one-month.

The immediate cushion is aligned at the pivot point one-day S1 at $1,657, below which a fresh downswing will kick in towards the $1,650 psychological mark.

The pivot point one-day S2 at $1,648 will then challenge bullish commitments.

On the flip side, buyers need to find a strong foothold above the confluence of the Fibonacci 23.6% one-day and the previous high four-hour at $1,667.

The next significant upside barrier is seen at the Fibonacci 38.2% one-day at $1,671, above which the Fibonacci 61.8% one-day at $1,675 will be put to test.

The previous year’s low of $1,677 will be a tough nut to crack for XAU optimists.

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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.