Gold Price Forecast: XAU/USD sellers dominate below $1,975, Fed clues, US default eyed – Confluence Detector

• Gold price remains depressed near seven-week low after breaking the key support confluence, now resistance.
• Concerns surrounding US debt ceiling extension, Fed propel US Dollar and please XAU/USD bears.
• No immediate decision on US default, Fed’s inability to justify hawkish bets can trigger Gold price recovery.

Gold price (XAU/USD) struggles for clear directions as bears take a breather at the lowest levels since early April after a three-day downtrend. The metal’s latest pause in further declines could be linked to the headlines suggesting the US House Freedom Caucus’s capacity to block any agreement to raise the $31.4 trillion debt ceiling. Also challenging the optimists is the US-Taiwan trade deal ahead of planned meetings between China's Commerce Minister Wang Wentao and USTR Tai and US Commerce Secretary Gina Raimondo, which in turn can propel the Sino-American tension and prods the XAU/USD bears.

Previously, a slump in the market’s bets on the US Federal Reserve (Fed) rate cut in 2023, as well as an increase in the odds of a 0.25% rate hike in June, joined firmer US data and hawkish Fed talks to propel the US Dollar Index (DXY) and weigh on the Gold price.

Moving on, Federal Reserve (Fed) Chairman Jerome Powell’s speech and US debt ceiling negotiations will be the key for the traders to watch as US President Joe Biden said to have the decision to avoid a default by Sunday.

Also read: Gold Price Forecast: XAU/USD stays bearish as US debt ceiling talks, Fed Chair Powell’s speech loom

Gold Price: Key levels to watch

As per our Technical Confluence Indicator, the Gold price defends the previous day’s downside break of the $1,975 support confluence despite the latest inaction around the multi-day low. It should be noted that the stated key support, now resistance, comprises the Pivot Point one week S2 and the Fibonacci 61.8% on the daily timeframe (TF).

Apart from the $1,975 hurdle, multiple hurdles near $1,965 and $1,960 also challenge the Gold price recovery. That said, Fibonacci 38.2% on daily TF highlights the $1,965 as one of the important resistance while Fibonacci 23.6% on daily timeframe (TF) constitutes $1,960 as support-turned-resistance.

In a case where the Gold price manages to cross the $1,975 hurdle, Pivot Point one day R1 surrounding $1,981 can act as an additional upside filter before giving control to the XAU/USD buyers.

Meanwhile, a convergence of the previous monthly low and the lower band of the Bollinger on four-hour (4H) highlights $1,950 as an immediate key support for the Gold bears to watch.

Following that, a joint of the Pivot Point one day S1, one week S3 and one month S1 flashes lights on the $1,945 as a tough nut to crack for the XAU/USD sellers.

Overall, the Gold price remains bearish unless crossing $1,980.

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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.