Title: Gold Price Forecast: XAU/USD eyes a sustained move below $1,800, downside appears limited

Dec 29, 2021 4:52AM ET

By: AnalysisWatch

The gold price extends the previous correction from monthly highs at $1,820 as the US dollar regains strength in a risk-averse market environment. Investors remain cautious in light of the global rise in COVID cases; although studies show that the Omicron variant is less severe. Increasing bets on a Fed rate hike in March have also put gold out of favor. Low liquidity and year-end profit-taking are also keeping gold on the defensive.

The Technical Confluences Detector shows gold approaching a strong demand area around $1,801 to $1,800, which is the convergence of the one-day SMA50, the four-hour SMA50, and the one-week Fibonacci 38.2%.

The next downside target is at $1,744, where the S2 pivot point on a daily basis coincides with the Fibonacci 61.8% on a weekly basis.

Sellers will then watch for the S1 weekly pivot point at $1,792, below which the daily SMA100 at $1,790 could be tested.

If, on the other hand, the $1,800 level holds, a rally towards the 23.6% Fibonacci weekly level at $1,806 cannot be ruled out.

Further up, the meeting of the 23.6% Fibonacci daily and the SMA5 daily at $1,809 comes into play, followed by the previous week's high at $1,811.

The coincidence of the 61.8% daily Fibonacci level and the R1 daily pivot point at $1,815 will be the decisive level for gold bulls.