Without a doubt yesterday's main event was the release of the minutes from the Federal Reserve's March policy meeting. The American dollar got a lift when minutes of the meeting showed that the Federal Open Market Committee members think that if the outlook for labor market conditions improve as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end. According to the records, a few members of the FOMC were highly concerned about the potential risks and costs of purchases. Now the real question is whether the latest jobs data changes the Fed's attitude toward less stimulus. They will probably wait and see how the economy evolves. Anyway, the Federal Reserve seems to be much closer to end (or reduce) quantitative easing, some time this year and of course this is easing speculative demand for gold. It seems that the market conditions (fundamentally and technically) are working against gold at the moment.
The XAU/USD pair (Gold vs. the American dollar) is currently trading at 1554.69 after yesterday’s freefall. Prices dropped below the Ichimoku cloud on the 4-hour time frame once again and the Tenkan-sen line (nine-period moving average, red line) is about to cross below the Kijun-sen line (twenty six-day moving average, green line). If the bulls can’t climb and hold above the 1564 – 1572 resistance zone, it is very likely that we will see the pair testing the 1548 and 1540 support levels.
Below that, there is a critical level at 1532. If we see a similar pattern (as in May 2012), the 1532 level which caused gold prices to reverse numerous times will be a key level to watch. In order to gain some traction, the bulls will need a close above the 1572 resistance. If that is the case, more resistance will be waiting the bulls at 1585 and 1591.
