By: DailyForex.com
The XAU/USD pair had a bearish session as expectations of a reduction in quantitative easing provided extra support for the American dollar. The pair traded as high as 1414.28 but prices went all the way down to the 1354.50 level after Fed Chief Ben Bernanke failed to provide the clear picture that the markets had hoped for.
Bernanke repeated that the central bank will continue its securities purchases (currently the Fed purchases $40 billion a month of mortgage-backed securities and $45 billion a month of long-term treasury securities) until the outlook for the labor market has improved substantially in a context of price stability.
However, he also noted that Fed's policy is future data dependent and because of that if committee members see continued improvement and they have confidence that that is going to be sustained, then they could reduce or end asset purchases. From a technical point of view, yesterday's price action suggests that higher prices are rejected by investors and speculative selling pressure could increase if the XAU/USD pair closes below the 1363 level. In other words, the bulls will have to push price above this level in order to gain some strength. If they manage to do that, resistance will be found at 1384.40, 1400 and 1411.
Only a daily close above the Ichimoku clouds on the 4-hour time frame could change the short-term technical outlook. If prices breach yesterday's low of 1354.50, I will be looking for 1348, 1336.50 and 1320. Since market sentiment is ultimately driven by expectations of tapering, I think today's jobs data will draw more attention than usual.
