By: DailyForex.com
The XAU/USD pair (Gold vs. the American dollar) settled higher yesterday, as weakness in the U.S. dollar and pullbacks in major stock markets increased investors’ appetite for the precious metal as an alternative investment. Reports show that demand for gold coins and bars remained strong in Asia. However, expectations that monetary stimulus by the U.S. Federal Reserve will soon come to an end continue to weigh on gold prices. Last week, minutes from the U.S. Federal Reserve's most recent policy meeting revealed that some voting members were willing to consider scaling back on asset purchases at the central bank's next few meetings. The XAU/USD pair is showing a tightening trading range as the market simply has no real catalyst to push prices in either direction. On the daily and weekly time frames, prices are below the Ichimoku clouds and we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) crosses, indicating that the long term outlook is bearish.
On the other hand, there is a triangle forming on the 4-hour chart and prices are trying to climb above the cloud. Because of that, I think the bulls are going to test the 1400 level again. Since this resistance has been blocking the bulls' way for eight straight sessions, only a close above this level could give them the power they need to push prices towards 1442. To the upside, there will be hurdles in the way such as 1411 and 1430. If the bears take over and increase the downward pressure, there will be support at 1376.30/1372.50, 1360 and 1354.50. Breaking below the 1354.50 support would confirm that the bears are firmly in control.
