The XAU/USD pair (Gold vs. the American dollar) ended the week with a loss and hit the lowest level since May 24. Prices failed to break above the 1420 resistance level during the Friday's European session and selling pressure increased after jobs data came in slightly better than expected. Payrolls rose 175K in May, according to data released from the Labor Department on Friday. Economists were expecting gains of 164K. The data out the United States provided further evidence that the world's biggest economy is on the right track, though we are still far from the Federal Reserve’s target. Federal Reserve Bank of Chicago President Charles Evans had called for six months of jobs growth above 200K per month before he had enough confidence to support an end to the quantitative easing program. However, the Federal Reserve seems to be much closer to reducing the pace of its purchases and this factor is easing speculative demand for gold. Until the market gets a clear signal from the Fed, optimistic economic data will push money into the greenback and U.S. stock markets. In my previous analysis, I repeated that I expect overall trend to remain bearish due to technical outlook we see on the weekly and daily charts.
The Ichimoku cloud indicates an area of support or resistance and in our case clouds are representing resistance zones. If the bulls can't pull and hold prices above the 1400 level, which coincides with the top of cloud on the 4-hour time frame, they will have to give up eventually. From an intra-day point of view, if falling prices attract some buyers and the pair starts to rise, I expect to see resistance at 1387, 1400 and 1414. If prices remain below the bottom of the cloud which currently sits around the 1387 level, I think we will test 1372.50 first. If the XAU/USD breaks below this support, then 1360 and 1354.50 will be the next targets. A weekly close below the 1354.50 level means that the bears are preparing to tackle 1338 and 1320.
