The XAU/USD pair (Gold vs. the American dollar) settled higher yesterday, marking the first rise in five trading sessions, as geopolitical concerns helped prices regain their footing. The XAU/USD pair found support just above the 1277 level and climbed as high as 1303.84 before pulling back to the 1295.49 level. The area between 1277 and 1268 has been a bottom for the market since the beginning of last month and as a result we have seen the buyers come in and step up the pressure every time the sellers had a chance to break out.
Technically this makes sense because the XAU/USD pair had paused or reversed at this same area several times in 2013. That means the bears will need to break below 1268 to increase selling pressure and visit the 1256 support level. Closing below the 1256 support level on a daily basis would place control back in the paws of the bears as we head towards 1237.
Right now prices are moving inside the Ichimoku clouds on the 4-hour time frame and we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) crosses (daily and 4-hour charts). To the upside, the first hurdle gold needs to jump is located around the 1307 level. The bulls have to capture this point so that they can march towards 1316.20. If they manage to push through, we might be revisiting the 1323 and then 1328 levels. It looks like we are going to be range bound in the near term.
