By: DailyForex.com
The XAU/USD pair rose for the week but the bulls continued to encounter heavy resistance around the 1400 level.
Demand for physical gold is still playing an important role in the market. However, news that China flash manufacturing PMI had fallen to a seven-month low and Fed Chairman Ben Bernanke's comments limited the shiny metal's gains. Although Fed Chief Bernanke's words were more balanced than the negative headlines suggested, minutes from FOMC meeting showed that some officials want the central bank to adjust the pace of monthly asset purchases based on improvement in the economic outlook.
If investors start to believe that the Fed's new plan is to taper off quantitative easing over the balance of the year, this would be supportive for the greenback but this could also cause market players to flee from equities and prompt funds to get back into gold. Daily chart shows the battle between the bulls and the bears intensified in the 1400 – 1354.50 zone. Sooner or later we will reach a point where it will simply have to break one way or the other.
