By: DailyForex.com
The XAU/USD pair closed yesterday's session higher after seven consecutive days of losses as investors took some of profit off the table prior to the release of the Federal Open Market Committee meeting minutes. The Federal Reserve will release minutes from its May 1 policy meeting on Wednesday. On the same day, Fed Chairman Ben Bernanke will testify before the Joint Economic Committee about the country's economic outlook.
XAU/USD has been quite bearish recently as the market conditions (both fundamentally and technically) have been working against gold and because of that, seeing investors in a cautious mode (assuming that Chairman Bernanke will stay dovish) is not so surprising. It appears that the XAU/USD pair reversed its direction after failing to break below a critical support level of 1336.50. However, the 1398 - 1400 area is a place that can slow the bulls' advance in the short term. If the market breaks through, there could be a run all the way back to the 1430 - 1442 zone which we encountered both support and resistance during the last 4 weeks. Since this area converges with the Ichimoku cloud on the 4-hour chart, I expect any rallies to struggle at that point. Only a sustained break above the 1442 could change the short term technical picture and extend the bullish movement towards 1486. If the bears take over and prices start to fall, there will be support at 1371, 1363 and 1350.80. A daily close below 1350.80 would make me think that the bears will be tackling the April 16 low of 1321.52 next.
