The XAU/USD pair rose for a fourth consecutive day as the conditions in the marketplace have increased investors’ appetite for the precious metal as an alternative investment. Gold closed the day at $1274.59 an ounce and this is the highest settlement since November 18. Recently the markets' focus shifted to U.S. debt ceiling issue and Janet Yellen’s first testimony as head of the Federal Reserve.
Last week President Barack Obama reiterated he isn’t going to negotiate with Republicans over raising the debt limit. Janet Yellen will testify before the House of Representatives Financial Services Committee today and the Senate Banking Committee on Thursday. It will be interesting to hear what she will say about the Fed's outlook for the economy and policy - especially after two dull payroll numbers in a row.
From a purely technical standpoint, I think the bulls have an advantage while the pair is trading above 1268, which hindered their progress previously. If the bulls manage to hold the market above the Ichimoku cloud on the daily time frame, they might be able to capture the 1278 fort and march towards the next barrier at 1287. As I mentioned in my previous analysis, the bulls have to break the 1278 level in order to gain enough momentum to challenge the bears at 1293.
A close above 1293 suggests that the XAU/USD pair may extend its gains and target the 1307 resistance level next. However, if the bulls continue to encounter heavy resistance at 1278 and prices reverse, the 1268 and 1255 support levels will be the keys to the downside. Breaking below 1255 could act as confirmation that the momentum is once again turning bearish.
