The XAU/USD pair scored its highest settlement in six months as heightened risk aversion, weaker American dollar and strong physical demand in Asia combined to lift prices above $1366 an ounce. Also continued volatility in the global equities markets increased desire for safe haven diversification and helped to boost the precious metal’s appeal in this regard.
Yesterday's price action marked a departure from a consolidation area between 1330 and 1355, and because of that I think the market is going to tackle the 1375.20 - 1376 resistance where the bottom of the Ichimoku cloud currently sits on the weekly chart. The Ichimoku cloud indicates an area of support or resistance and in our case clouds are representing the resistance zone ahead of us.
With that in mind, I expect to see some resistance between 1376 and 1438 levels which define the borders of the weekly cloud. However, lately the biggest influence on the gold price is the conflict between Russia and Ukraine so if the situation in the region escalates, the gold market could become erratic. If the bulls manage to shatter the first barrier at 1376, it is technically possible to see a bullish continuation targeting the 1384.50 and 1392 levels.
Beyond 1392, there will be significant resistance around the 1400 - 1416 area. If the bulls fail to breach 1376 and the pair reverses, there is an interim support around the 1364.75 - 1363 levels. The bears will have to drag prices below the 1355 support level in order to gain some momentum. If the XAU/USD pair breaks this support level, prices may pull back to the bottom of the ascending channel which currently sits around 1346/3. Today the market participants will be focusing on retail sales figures and unemployment claims data.
