The XAU/USD (Gold vs. the American dollar) settled slightly higher yesterday, marking the first rise in five trading sessions, as caution set in ahead of high impact economic data releases later today. The pair tried to pass the first resistance level of 1587 but run out of gas after a report from the Institute for Supply Management revealed that non-manufacturing index increased to 56 from 55.2. Today we see prices found support around the 1570 level which is the bottom line of a recent consolidation area. Although prices have been slightly bullish during the Asian session, I don't see any strong momentum at the moment. I think market participants will be waiting for the Fed’s Beige Book and Non-Farm Employment Change report from ADP Research Institute before putting larger bets. From a technical point of view, the broader directional bias remains weighted to the downside. The weekly and daily charts are extremely bearish while the pair is trading below the Ichimoku cloud. We also have bearish Tenkan-Sen (nine-period moving average, red line) - Kijun-Sen (twenty six-day moving average, green line) crosses on both charts.
However, if the bulls manage to hold the pair above the 1570 level, we may see a bullish attempt in the near-term. Because of that, I will keep watching the 1670-1587 area and waiting for a breakout. To the upside, there will be more resistance at 1597.77 and 1604. If price can push back up and close above the 1604 level, we might see a bullish continuation targeting 1625 at least. If prices resume the bearish tone of the last few months and successfully close below 1570, then I think we might revisit the 1564 and 1555 support levels.
