Gold prices rose on Wednesday after choppy trading session. The XAU/USD pair traded as low as $1213.63 an ounce as the dollar edged higher on the back of on the back of solid U.S. economic data. The Labor Department reported its consumer price index jumped 0.6% in January, well above expectations for a rise of 0.3%. In a separate report, the Commerce Department said retail sales increased 0.4% last month.
Despite upbeat U.S. economic data, the yellow metal reversed its course and ended the day on the upside, forming a hammer. Yesterday’s candle which left a long lower shadow suggests that buying interest emerges on dips. The market looks as if it will to try to break to the upside, and march towards the 1247/6 zone. However, as I mentioned previously, the market has to climb and hold beyond the 1237/35 area in order to support this theory. A break through there brings in 1252.
On the other hand, a failed attempt to break through the anticipated resistance in the 1237/35 area could help bears pull prices back to 1232/29, where the top of the daily Ichimoku cloud and the Tenkan-Sen (nine-period moving average, red line) coincide. If XAU/USD drops below 1229, then 1225 will be the next stop. Down below, the 1220/19 area stands out as an obvious support. The bears have to capture this camp so that they can have a chance to visit 1213/1.
