Gold prices lost some ground against the greenback after the latest U.S. retail sales data came out stronger than expected. Data released from the Commerce Department showed that sales jumped 1.1% in February. Since domestic demand has a very important role in the U.S. economy, the greenback gained across the board. The XAU/USD pair traded as high 1599.24 but pulled back sharply to 1585.58 after the data release. As a result, prices are stuck in the Ichimoku cloud on the 4-hour time frame and this suggests neither bulls nor bears are strong enough to dominate the market at the moment. Although gold bulls have been doing a good job to protect their ground, they don't seem to have the strength to reverse the trend while the market is waiting to hear how the Federal Reserve will react. Stronger data out of the U.S. recently increased worries that the Fed will scale back quantitative easing earlier than anticipated. According to the daily and 4-hour charts, it is quite possible that the XAU/USD pair will continue its consolidation period until we clear certain levels.
If the bulls can build some steam and get a close above the 1597.77, look for more resistance at 1604 and 1615 before heading up to 1625. If the downward pressure continues and prices start to fall, there will be support at 1585, 1580 and 1572. A daily close below the 1572 level could act as a confirmation that the momentum is once again turning bearish.
