Gold prices (XAU/USD) settled higher after a choppy session yesterday. The pair traded as low as 1567.36 after the ADP Research Institute said companies in the U.S. added 198000 workers last month but prices bounced back to 1584 as buyers stepped in. XAU/USD has been range bound since Friday and I think that the price action will be limited until we manage to leave this consolidation (1587-1570) area completely. Although the latest economic data confirm that labor market conditions are improving, Federal Reserve Chairman Ben Bernanke and Vice Chairman Janet Yellen think that continuing the asset purchase program is necessary to support the economic recovery process. Today sees key central bank meetings. Therefore investors will be waiting for the Bank of Japan (BOJ), Bank of England (BOE) and European Central Bank (ECB) announce their latest policy decisions. With this in mind, I think it makes more sense to wait until we break out of this consolidation box.
If we can successfully break through the 1587 level, where the Ichimoku cloud resides on the 4-hour time frame, then the next targets will be 1597.77, 1604 and 1625. However, if the headlines support the American dollar and the pair closes below 1570, I will be looking for 1564, 1555 and 1547.92.
