The XAU/USD pair rose for a second-straight session to settle at their highest level since April 15, as separatist unrest in eastern Ukraine buoyed the precious metal’s safe-haven appeal. The pair traded as high as $1315.55 an ounce but gave up some of its earlier gains after better than estimated U.S. data triggered profit taking. The Institute for Supply Management's non-manufacturing index came in at 55.2, up from the previous month's 53.1 and above expectations for a reading of 54.3.
Concerns over escalating conflict between Ukrainian troops and armed protesters in eastern Ukraine (and of course Russia's role in it) have been driving this market’s bullish activity and if things get worse the bulls will take advantage of that push prices towards the 1351.50 level. But in order to do that, they will need to pass through the Ichimoku clouds on the daily chart.
With that in mind, I think the key level to the upside is located at the 1316.20. If the market shatters this barrier, I will look for 1323 next. Closing above 1323 would suggest that the bulls are targeting 1328 and 1340. However, if the cloud on the daily time frame offers strong resistance and prices start to fall, expect to see some support in the 1307 - 1304 area. The bears will have to capture this point so that they can march towards 1299/8. If this support gives way, we might be revisiting the 1293 support level.
