Gold prices continued to advance on expectations the Federal Reserve will maintain its monetary stimulus at its next meeting which will be held on July 30-31. Minutes from the U.S. Federal Reserve's most recent meeting had indicated that the central bank might not be as close to slowing asset buying program as investors had begun to expect. However, the main scenario is still for tapering of asset purchases to start in September. Also keep in mind that the pace of the tapering will be determined by economic conditions. In the meantime, investors will be waiting for HSBC's Chinese manufacturing index data. If data out of the world's second biggest gold consumer disappoints the market, the bulls may start to feel some extra pressure. Technically another thing to pay attention is that the pair has been following an ascending channel since hitting a 34-month low on June 28 at 1180.21 and now we are approaching to the top of the channel and the Ichimoku clouds on the daily time frame. The Ichimoku cloud indicates a good area of support (or resistance in our case) and when the cloud coincides with a former support/resistance level, they can be quite powerful. Because of that, I think the bulls will have hard time in the near term. If prices continue to rise, there will be hurdles in the way such as 1354.50, 1365.80 and 1388. Until we break above the clouds, I will be looking signs of weakness-reversal to go short. If the bears take the reins and prices reverse, support can be found at 1326.70, 1320 and 1312.70.
