The XAU/USD pair continues to bounce in a tight range since yesterday as the market has no idea where to go. The demand for safe-haven gold decreased after President Barack Obama said he isn’t confident that Congress will authorize military strikes against Syria.
Recent polls show that public opposition is growing as well. It seems that geopolitical tensions coupled with uncertainty over whether the U.S. Federal Reserve will begin to taper its bond buying next week will keep investors sidelined for while. Although last week's data raised some doubts over the health of the world's largest economy, surveys show that majority of investor think the Federal Reserve will reduce its quantitative easing program to $75 billion a month at its September 17-18 meeting.
Lately the XAU/USD pair has been consolidating between 1395 and 1380 and since we lack a strong catalyst to break out either way, I will be watching these levels in the short term. Trading below the Ichimoku cloud on the 4-hour time frame indicates a bearish outlook but if the bulls build some steam and shatter the 1395 - 1400 barrier, gold prices will probably have enough momentum to test the 1416 - 1425 area. However, if the bears start to dominate the market and pull prices below 1380, their next target will be the 1360 level. Below that, there will be support at 1353 and 1347.
A daily close below this level would suggest that the 1324 level (Fibonacci 23.6 based on the bearish run from 1795.75 to 1180.21) will be tested soon after.
