The XAU/USD pair fell sharply and traded as low as 1558.46 yesterday as the pair accelerated its decline after breaking below a critical support level of 1588 which was the bottom of the descending channel. 1558.46 is the lowest level since July 12. Yesterday's main event was release of the minutes of the Federal Open Market Committee meeting held on January 29-30. The minutes from the FOMC meeting showed many participants voiced concerns about potential risks of more quantitative easing, hinting that the central bank may stop or slow buying assets sooner rather than later (before they reach their target for a sustained increase in jobs of 200K/Month). “A number of participants stated that an ongoing evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred". The officials emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved” the minutes said. Although I was expecting prices to reach 1564 level eventually, I didn't think we could reach there in such a short time. If the bulls can't push prices above this level, it is likely that the pair will test 1554 and then the June 28 low of 1547.92.
Once we break below 1547.92, 1545 and 1532 will be the next targets for the bears to achieve. Since catching a falling knife is not my specialty, I won't be considering a long position at this point. However, there is a fact that the pair has been falling relentlessly for 2 weeks, so we may see some profit taking. If the XAU/USD bounces from here, resistance will be found at 1564, 1570.23 and 1576.
