For the third week in a row, the XAU/USD pair settled higher than opening. The XAU/USD pair traded as high as 1248.85 as the American dollar lost some strength after economic data out of the United States came out weaker than expected. Data from the Labor Department showed that unemployment rate fell to 6.7% but non-farm payrolls grew only 74K in December, well below expectations of 196K.
Some people think that job figures were distorted by bad weather conditions and the Fed would be disinclined to react to one month’s numbers. Still, shrinking labor-force participation is disappointing. Over the years I've learnt that the news doesn't make the market, rather the market makes the news. So, following the charts and identifying the major focus of big players should be our first priority. Friday's data from the Commodity Futures Trading Commission (CFTC) showed that speculative traders on the Chicago Mercantile Exchange increased their net-long positions in gold (for the third consecutive week) to 38887 contracts, from 32223 a week earlier.
Since the XAU/USD pair climbed above the Ichimoku cloud on the 4-hour time frame, I have been telling that the odds favor the bulls and because of that selling is not an option in the short-term. I think there is still some more room to the upside but prices are approaching to the Ichimoku clouds on the daily chart. In order to reach the top of the descending channel which currently sits around the December 10 high of 1268, the bulls have to push prices above the 1252 resistance level.
Only a close above 1268 could open the doors towards 1278 - 1282 zone. If the bulls encounter heavy resistance and prices reverse, there will be support at 1237 and 1225. Failure to hold prices above 1225 could bring sellers back to the market. If that is the case, we might see prices falling back to 1215 - 1213 area.
