The XAU/USD pair had a bullish day as gold buying frenzy continued to drive prices higher. Also the recent weakness in the American dollar has been providing support for the shiny metal. Yesterday, the pair traded as high as 1469.18 after the bulls shattered the first barrier. In my previous analysis I had told that the bulls will eventually reach 1555 but frankly I was thinking that this area might be a cap on gold prices. Since we broke above the Ichimoku cloud (and we also have a bullish Tenkan Sen – Kijun Sen cross) on the 4-hour time frame, I believe the bulls will be controlling the XAU/USD pair in the-near term. Currently the pair is trading at 1476.53, just above the previous resistance level of 1473. If the bulls successfully hold above this level, we will probably see 1486 printing on our screen before a pull back occurs. Beyond 1486, the real challenge will be waiting the bulls at the 1495 - 1500 area.
This is a vital level that the bulls have to pass in order to push prices higher. However, if the bears increase the pressure at 1486 and prices reverse, look for support at 1473, 1455 and 1444. Today investors' focus will be on the U.S. growth data, so expect some volatility.
