Although gold prices declined on Friday, the market had a strong week overall. The XAU/USD pair traded as high as 1485.45 but prices reversed after encountering heavy selling pressure at that point. In my previous analysis, I had mentioned that we were going to see 1486 printing on our chart before a pull back and the last trading session of the week has proven that breaking through this zone is essential for a bullish continuation. Considering the fact that even highly disappointing numbers out of the Unites States couldn't help the bulls to push prices above this former support (now resistance) level, there is a possibility of prices heading lower towards the lower line of the Ichimoku cloud, which sits at the 1411 level, on the 4-hour chart.
Data released from the Commerce Department showed that gross domestic product rose at a 2.5% annualized rate, 0.5% less than widely anticipated. Reuters/University of Michigan Consumer Sentiment Index came out at 76.4 in the April survey, down from 78.6 in March. The preliminary reading was 72.3 for April. The XAU/USD pair closed the week just above the cloud at the 1455 level as the bulls found support at the Kijun-sen line (twenty six-day moving average, green line), which resides at the 1444 level. I think that will be the key level to (the downside) watch. If the bears regain strength and prices drop below 1444, look for 1430 and 1411. A close below 1398 would suggest that we are heading back to 1363. If 1444 hold, it is possible that prices will continue its bullish tendencies and try to push through the resistance level at 1486. If that is the case, expect to see resistance at 1498 and 1505. Since Friday's numbers suggest that the economic recovery is losing momentum, the Federal Reserve may decide to continue its ultra-loose monetary policy at its next meeting. As usual in the first week of the month -aside from the central banks' meetings- plenty of economic data is scheduled for the week ahead, including pending home sales, Chicago PMI, ISM manufacturing and services activity surveys, ADP non-farm payrolls and unemployment rate.
