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Title : Gold Price Forecast: XAU/USD likely to extend range play around $1,660 – Confluence Detector

Oct 03, 2022 5:19 AM ET


Gold prices move back and forth in a familiar range above $1650 as investors refrain from making directional bets amid heightened geopolitical tensions related to Russia and Ukraine, aggressive Fed rate hike bets, and rising oil prices. Meanwhile, the U.S. dollar trades choppy but slightly lower, limiting the bullion's downside.

The U.K. fiscal policy shift put a sudden bid under GBP/USD, inducing further weakness in the greenback while helping the metal defend slight gains. After the final Eurozone and UK manufacturing PMIs failed to impress the market, attention shifted to the ISM manufacturing PMIs from the U.S. However, the main risk this week remains the release of U.S. non-farm payrolls data on Friday.

The Technical Confluence Detector shows that gold prices are looking to challenge the $1,660 support zone, where the previous day's low, the one-month 38.2% Fibonacci, and the one-week 23.6% Fibonacci coincide.

The one-day SMA10 at $1,657 will be the next stop for sellers. Further down, the confluence of the four-hour SMA50 and the one-week 38.2% Fibonacci at around $1,654 could be tested.

The pivot point between the meeting points of the one-day S2 and the one-hour SMA100 at $1,650 will be the line in the sand for buyers.

On the other hand, the 38.2% one-day Fibonacci point at $1,665 offers immediate resistance for the bulls, above which a run to the $1,670 level cannot be ruled out. That level is the convergence of the 61.8% one-day Fibonacci 61.8% and the one-day pivot point R1.

The previous day's high of $1,675 will be next on buyers' radar, followed by the previous year's low at $1,677.

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