By: DailyFoex.com
The XAU/USD pair posted first weekly loss in four weeks as heightened appetite for more conventional assets such as stocks lured some investors away from the shiny metal. Gold traded as low as $1319.68 an ounce after the Chicago purchasing managers index came out stronger than expected with a print of 59.8 and the University of Michigan reported that its consumer sentiment index climbed to 81.6 from 81.2 a month earlier.
Commerce Department's gross domestic product data were weak but were more or less in line with market expectations. The first week of the month is always a busy one for the central banks. This week also sees the usual release of PMI (Purchasing Managers’ Index) reports from important economies around the world. The highlight of the week will come on Friday when the U.S. Labor Department releases its employment report for February.
Because of that, I think gold prices will probably tend toward consolidation for a while. Speaking strictly based on the charts, it seems that there is still some room for the pair to run higher, if the bulls manage to hold the market above the Ichimoku cloud on the 4-hour time frame. In other words, we might see the pair revisiting 1337/8 resistance unless the 1312 support level where the bottom of the cloud currently resides is breached.
In order to gain more traction and start a new journey to the 1346 level, the bulls have to break through 1337/8 (61.8 Fibonacci retracement). If the downward pressure continues and we break below 1312, I think the market will be testing 1307 next. Closing below 1307 means it is possible to see a bearish continuation to the next key support level of 1293.
