The XAU/USD pair (Gold vs. the American dollar) closed the day slightly higher than opening as the lowest prices since last summer attracted some buyers yesterday. However, better-than-expected data out of the U.S. limited the shiny metal's gains. Data released by the Department of Labor showed that the number of Americans who filed for unemployment insurance payments for the first time decreased by 42000 to 346000, pointing to further improvement in the labor market. Recently the pair has been trying to build some type of base just above the 1554 level but charts don't show any real bullish momentum. Major equity markets continue to rally and USD/JPY is approaching to its highest level since May 2009. From a technical point of view, I think a weekly close under the 1554 level will be highly negative for the pair since we are currently trading below the lowest settlement price since mid-2011.
If the bulls fail to defend this critical support and we end the week below that level, speculative selling pressure would increase drastically. If that is the case, I will be looking for 1546.50, 1540.10 and 1532. To the upside, the first challenge will be waiting the bulls at 1568. If prices break above this level, we could possibly see the bulls make a run for the 1574 level which happens to be the top of the Ichimoku clouds on the 4-hour time frame. A close above the 1574 resistance would signal that the pair is most likely headed for the next strong resistance levels at 1583 and 1590.
