Although XAU/USD pair tried to climb yesterday, the bulls run out of gas and failed to break through the descending trend line which the market has been following recently. As a result, the XAU/USD pair pulled back to the bottom of the Ichimoku clouds on the 4-hour time frame and closed the day at $1292.78 an ounce. This suggests that neither the bulls nor the bears are strong enough to dominate the market at the moment.
For the last couple of weeks, the Ichimoku clouds on the weekly and daily charts have been blocking the bulls' way but the area between 1287/3 (50% retracement level based on the bullish run from 1182.35 to 1392.04) and 1277 (a former support/resistance) has been supportive. It appears that traders are reluctant to take sizable positions prior to the release of the Federal Open Market Committee meeting minutes.
The Federal Reserve will release minutes from its April 29-30 policy meeting on Wednesday. Since last week, I have been repeating that we were going to be range bound in the near term and it looks like this will be the case until we breach either the 4 week high, or low. Intra-day traders should pay attention to the support around 1287/3. If the bulls manage to defend this level, they might have a chance to break above the descending line and test the next barrier at 1307. A close above that would open the doors to 1312. However, if the bears win the fight and drag the market below 1287/3, it is likely that we will be testing 1277. Closing below the 1277 level on a daily basis would suggest that 1268 will be the next stop.
