The XAU/USD pair fell for a second day as the bulls failed to clear trend line resistance around the 1300 level. Although the precious metal got a lift last week after G7 leaders agreed to impose additional sanctions on Russia, expectation that the U.S. economic data is going to improve as the weather gets better and the U.S. Federal Reserve will continue to turn down the tap on its monthly asset purchases weigh on the market.
The Fed's policy statement will be issued at the close of its two-day meeting today. It is not only the FOMC that is coming up today; we also have U.S. first-quarter GDP, ADP employment and Chicago PMI data. During the Asian session the XAU/USD pair is hovering just above the 1293 support level but since we are moving inside the Ichimoku cloud on the 4-hour time frame, I will be focusing on the 1307 and 1285 levels.
The bulls will have to break above the descending trend-line dating back to the March high of 1392.04 and capture the first strategic fort at 1307. Only a close above 1307 could give the bulls the extra strength they need to retest the 1311 and 1316 levels. However, if the bears increase the downward pressure and drag the market below the 1285 support level, the pair will most likely head for 1277. Breaching the floor at 1268 would shift momentum to the bears’ favor and clear the path to 1256.
