The XAU/USD pair closed the week lower than opening as waning likelihood of a military action against Syria and expectations that the quantitative easing program will be scaled back continued to weigh on the market. Although gold prices fell below the 1320 support and traded as low as 1304.88 level (which also happens to be the %50 retracement level based on the bullish run from 1180.21 to 1433.70) during Friday's session, some weaker-than-expected economic data out of the United States helped gold to recover initial losses and close around the 1324 level.
The Commerce Department reported that retail sales rose only 0.2% in August and according to the report released by the University of Michigan, preliminary index of consumer sentiment dropped to 76.8 from 82.1. Friday's data from the Commodity Futures Trading Commission (CFTC) show that speculative investors reduced their net-long position in gold to 68724 contracts, from 78191 a week earlier. From a purely technical standpoint, I think the Ichimoku clouds on the daily chart will be supportive in the short term. In other words, 1302 - 1291 area will be the key for continuation of the recent bearish run and if prices drop below this level, I think we will reach 1275 - 1269 zone eventually. However, if the XAU/USD pair manages to hold above the 1320 level and starts to climb, the first challenge will be waiting the bulls at 1333.
The bulls have to climb above this level in order to ease selling pressure and regain more strength. Beyond 1333, resistance can be found at 1345 and 1353. The main event of the week will be the Federal Open Market Committee meeting and Chairman Bernanke’s press conference on Wednesday.
