The XAU/USD closed higher than opening as the weak data out of the U.S. weighed on the greenback. The pair initially fell to a 30-week low of 1555.04 before recovering to 1582. Gold prices gained some ground after the Labor Department reported that the number of first-time applicants for jobless benefits increased 20K to 362K and data released by the Federal Reserve Bank of Philadelphia revealed that its manufacturing index dropped to -12.5 from -5.8. Also Markit's flash manufacturing purchasing managers' index was slightly below the expectations (55.2 vs. 55.8 prior). These data eased concerns over the Fed policy makers may end $85 billion in monthly asset purchases sooner than anticipated. Support zone at 1554/48 which has established itself as an important level several times during the last summer will continue to remain as a key level to the downside. A break below this level could send prices back to 1545 and then 1532.
From an intraday perspective, look for some support at 1576, 1570.30 and 1564. To the upside, the bulls will need to break through the 1587 resistance level, which also happens to be the Kijun-sen line (twenty six-day moving average, green line) on the 4-hour time frame, in order to gain enough strength to challenge the bears at the 1598 level. If the bulls manage to push prices back up and close above the 1598 level, we might see a bullish continuation targeting 1625 at least.
