The XAUUSD pair rose to its highest level since November 20 after the bulls managed to push prices above the 1252 resistance levels. Although the markets are still waiting to see how the Federal Reserve will react to the changes in the economy and how U.S. policymakers deal with the budget deficit and debt ceiling issue, there is a growing conviction that the central bank is likely to hold off reducing its asset purchases until January or March to ensure the economy is on solid ground, and this is supporting gold prices at the moment.
In my previous analysis, I had mentioned that the short term charts were turning bullish and we could go as high as 1268. However, since this level held the market for several times in the past, it might be hard to maintain yesterday’s momentum and break through. Because of that, I wouldn't be surprised to see a pull back towards the 1252 level (and test it as a support) before heading higher.
If we break above the 1268 level, I think speculative buying pressure would increase and push the pair to the upper band of the ascending channel which currently sits at 1300. The Ichimoku clouds currently reside around 1300 – 1320 so I expect to see some significant selling pressure at that point. If the 1252 level fails to reverse prices, then the next support levels to pay attention will be 1243 and 1237.
