Gold prices (XAU/USD) fell yesterday as the bears managed to defend the 1255 resistance level. The XAU/USD pair traded as low as $1235.58 an ounce after the support at 1245 was broken. The XAU/USD pair has been range bound for seven days. It seems that the majority of market players want to see what the U.S. Federal Reserve has to offer at next week's policy meeting before putting larger bets.
The market finds the 1255 - 1268 area, where so many resistances such as the Ichimoku clouds on the daily chart and the upper band of the bearish channel reside, too resistive to conquer. Meanwhile, the bulls don’t want to give up and they work hard to hold prices above the 1235 support level. With this in mind, I think it makes more sense to wait until we break out of this consolidation box.
Although some people may find it boring, sooner or later we will reach a point where it will simply have to break one way or the other. Technically, only a sustained break above the 1268 level could increase speculative buying pressure. In that case, 1277, 1286.70 and 1307 will be the next possible targets for the bulls to capture. The bears will have to drag the market back below the Ichimoku clouds on the 4-hour time frame (i.e. the 1235 support level) in order to gain enough momentum to challenge the bulls at 1225 and 1213. A weekly close below the 1213 support level would make me think that we are heading towards the 1195 - 1188 area.
