The XAU/USD pair closed Friday's session lower than opening but remained within the previous four days trading range. Gold prices rose 0.6% over the course of the week as investors turned to the relative safety of the precious metal. The pair traded as low as $1328.95 an ounce after data released by the Labor Department showed that the U.S. economy added 175K jobs in February and the unemployment rate increased to 6.7% from 6.6%.
Some economists were expecting gains of 150K. Recently fears over the growing threat of war between Russia and Ukraine have been driving this market’s bullish activity and because of that gold can still be considered as a safe-haven in the coming weeks if the situation in the region gets worse. The fact that the bulls successfully defended the 1330 level and held prices inside the ascending channel (4-hour chart) even after an encouraging U.S. jobs report supports this theory.
However, there are other factors to pay attention. Absence of inflation, belief that the Federal Reserve will continue to reduce the pace its quantitative program and persistent uptrend in the U.S equities markets may sap gold's safe-haven appeal.
The 4-hour chart indicates the battle between the bulls and the bears intensified in the 1330 – 1355 area, so I think these will be the key levels to watch in the short-term. To put it another way, although the pair receives support from the Ichimoku cloud on the 4-hour time frame, the market feels some pressure which is caused by the clouds on the weekly time frame. If the bears increase the downward pressure and drag gold prices below 1330, the pair may visit the 1320 support level.
Below that, the next challenge will be waiting the bears at 1307. If the bulls successfully push price above 1346, it is likely that we will see the XAU/USD pair testing the first strategic barrier at 1355. Once the bulls clear 1355, they will be aiming for 1361.76 and 1375.20.