The XAU/USD pair had a bearish day as investors continued to take profit off the table ahead of the Federal Open Market Committee's two-day policy meeting which will begin on Tuesday. Breaking below the 1353 support level triggered a sell-off which gained momentum after a Labor Department report showed that first-time claims for unemployment insurance fell by 31K to 292K. Afterwards, the department announced that computer upgrades at two states affected the counts.
The XAU/USD pair closed the day at 1321.27, the lowest settlement since August 14. Recently the market conditions (both fundamentally and technically) have been working against gold. American and Russian politicians' efforts to remove Syria’s chemical weapons eased concerns about a U.S. military strike against Syria and the market players are speculating that the U.S. economy is strong enough for the Federal Reserve to start reducing massive stimulus.
In my previous analysis, I had mentioned that short term charts suggest that a retest of 1333 and 1324 is likely if the 1353 support is broken. Now the XAU/USD pair is trying to form a bottom around the 1320 level during the Asian session today and therefore it is technically possible to see a short-term bounce targeting the bottom of the channel which was broken yesterday. If that is the case, there will be resistance at 1333, 1345 and 1353. If the bears continue to dominate the market and drag prices below the 1320 level, we may see another bearish attempt towards the 1302 - 1291 area.
A weekly close below the 1291 support level which happens to be the bottom of the Ichimoku cloud on the daily time frame would be highly negative. Today sees release of important economic reports such as producer price index, retail sales and University of Michigan consumer sentiment (preliminary), so expect some volatility.
