Recently the XAU/USD pair has been continuously held in check by the key 1400 resistance. Yesterday's trading session was no different than the last nine days. The pair traded as high as 1400.93 but retreated back to the 1381 level -which was the bottom of the Ichimoku cloud on the 4-hour time frame- as the stronger-than-expected U.S. data continued to weigh on gold. Data released by the Conference Board showed that its consumer confidence index climbed to 76.2 from 69 the prior month and S&P's report said index of property values rose 10.9%. On the one hand we see bearish pressure from strong global equities markets, low inflation expectations worldwide and good U.S. economic data but on the other hand the precious metal is finding some support due to increasing demand from Asia and central banks. Because of that, it makes more sense to wait until we break out of this tight market. The key levels to watch today will be 1400 and 1372.50. If we can break and hold above the 1400 level, 4-hour chart will be favoring the bulls.
If that is the case, I think it is very likely that the pair will revisit the 1442 level which converges with the bottom of the Ichimoku cloud on the daily chart. On its way up, expect to see some resistance at 1411 and 1430. However, if the bears increase pressure and pull prices below the 1372.50 support, I believe we will be testing the 1360 level next. If the 1360 support gives way, the real challenge will be waiting the bears at the 1354.50 level, the bottom of the recent consolidation range.
