By: DailyForex.com
Gold prices (XAU/USD) rose slightly on Monday as concerns about volatility in the global equities and recent strength in the Japanese yen increased the precious metal's appeal. However, it appears that the bulls are having hard time to shatter the first barrier at 1400. The 1400 area has been a cap on the price of gold for the last eight trading sessions and as a result we continue to see the sellers come in and step up the pressure every time the buyers have a chance to break out. Of course yesterday's price action was not a big surprise since U.S. and London markets were closed for public holiday. On the one side we have growing expectations of a reduction in quantitative easing, while on the other side lower spot prices have been attracting buyers. Although recent reports shows the central banks from emerging countries continue to purchase gold as a way of strengthening and diversifying their assets, breaking below the 1532 level, which held the bears' advance for 80 weeks, was a significant event from a technical point of view. On the weekly and daily time frames, prices remain below the Ichimoku cloud, suggesting that the overall trend is bearish. On the 4-hour chart, the XAU/USD pair is consolidating inside the cloud.
From an intra-day perspective, I think the 1400 level will be an area which the buyers will struggle to get above. But if investors start to shift money from equities to gold, the short term scenario might change. A sustained break above the 1400 level could increase speculative buying pressure. In that case, 1411, 1430 and 1442 will be the next possible targets for the bulls to capture. Any failure to break above the 1400 resistance level will probably take us all the way back to the 1354.50. On its way down, support can be found at 1372.50 and 1360.
