The XAU/USD pair closed yesterday's session lower than opening after the latest reports released from the Unite States provided further evidence that the world's biggest economy is on the right track. According to the report released by the Labor Department, the number of first-time applicants for jobless benefits dropped by 10000 to 316000. The Chicago purchasing managers’ index came out stronger than expected with a print of 63.0 and the University of Michigan reported that its consumer sentiment index climbed to 75.1 from 73.2 a month earlier. The bulls continue to suffer as a direct result of a strengthening American dollar but still trying to hold prices above the 1237 level. With the Thanksgiving holiday, it is very likely that today's trading activity will be light and this could keep the market quite flat in the end.
For the last 6 days, the XAU/USD pair has been trying to form a bottom. However, the pair is still trading below the Ichimoku clouds on the 4-hour time frame. In order to confirm a short term reversal is on its way, prices have to break through several resistances ahead of us. Usually I wait for prices to climb above the clouds (in our case, the upper band currently resides at 1261) first but since the 1268 level acted as a significant support in the past, I will raise the bar to that level.
Only a sustained break above 1268 would make me think that the bulls gained enough momentum to tackle the 1293 resistance level. The pair is sitting just above the 1237 line and if the bears can clear today's low, we will probably see prices falling to 1225.50. Closing below that support would indicate that the bears are aiming for 1213 (or even 1200) next.
