The XAUUSD pair advanced to its highest level since December 11 after the bulls managed to reverse the course and pushed prices above the 1245 resistance levels. Although the markets are still waiting to see how the Federal Reserve will react to the changes in the economy at next week's meeting, weaker than expected data out of the world's largest economy raised doubts about how quickly the Federal Reserve would trim the pace of its monthly asset purchases.
The Labor Department reported that the number of Americans filing first-time claims for unemployment insurance payments increased by 1K to 326K and data released from Markit showed that its flash manufacturing purchasing managers’ index fell to 53.7 in January from 55 in December.
The XAU/USD pair finally escaped from the consolidation zone, that we have been watching for days, on a daily basis and also broke out of the descending channel originating in September. However, we are approaching to the 1268 level (a former support/resistance) so may see prices revisiting 1255 - 1245 area before the bulls make an attempt to break through.
As I mentioned in my previous analysis, if the XAU/USD pair pushes through the Ichimoku cloud (the daily chart), there could be a run all the way back to the 1307/15 area. On its journey, there will be speed bumps at 1277 and 1286.70. If the bears take over and drag the market below 1245, their next target will be the 1235 support level. I think the shiny metal's fate will depend on what direction major equity markets (and the USD/JPY pair) will take.
