The XAU/USD pair had 4 bearish days in a row as the American dollar continued to gain strength on hopes that the data which will be released from the United States this week will beat expectations. It seems that the greenback continues to be the currency everyone wants to own and this will keep pressure on gold prices. The U.S and Japan stock markets are extending recent gains and USD/JPY hit 4-1/2-year high. Because of this strong rally, I think the money will flow into these markets.
Also, growing expectations that the Federal Reserve will reduce monetary stimulus had an impact on gold investors' sentiment. Last week, Federal Reserve Bank of Philadelphia President Charles Plosser, had told he favors reducing the central bank’s $85 billion in monthly asset purchases that were designed to support the economic recovery process. The XAU/USD pair is currently trading right below the 1430 level which happens to be the Fibonacci 23.6 based on the bearish run from 1795.52 to 1321.52 and it appears that there is more strength behind the bears.
Prices are below the Ichimoku clouds on the 4-hour, daily and weekly time frames. In addition, we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) crosses.
Because of that, until this bearish outlook change, I think it is risky to open long position on this pair. The most probable scenario in today's trading is that we see prices bouncing between 1442 and 1411. If the bulls take the reins and push the pair above the 1442 resistance level, expect to see more resistance at 1464 and 1486. Only a sustained break above the 1486 could ease the selling pressure for a while. But, if the bulls fail and prices keep falling, I think we will be testing 1411 and then 1398. A close below 1398 might increase speculative selling drastically.
