Gold prices ended Monday’s session up 0.27%, or $3.34, to settle at $1255.20 an ounce as the dollar weakened after industrial production and Empire State PMI data fell short of market forecasts. The XAU/USD pair has been bouncing roughly between the $1263 and $1249 levels for some time now and the pattern on the daily chart suggests that gold prices will tend toward consolidation as markets await closely watched CPI data.
Gold is currently trading at 1258.76, slightly higher than the opening price of 1253.81. On the daily chart, the market is trading below the Ichimoku clouds and we have a bearish Tenkan-Sen (nine-period moving average, red line) – Kijun-Sen (twenty six-period moving average, green line) cross. On the weekly time frame, however, prices are still above the cloud and the Tenkan-Sen and the Kijun-Sen are positively aligned.
With these in mind, I think XAU/USD will either break through the 1265/3 resistance and proceed 1277 or drop below the 1250/49 zone and head back to 1243/0. On its way up, resistance can be found in the 1270/69 area. The bull have to push prices beyond 1277 so that they can approach the next significant barrier at 1285. If prices fall through 1243/0, then it is likely that the market will test 1237 afterwards. Closing below that would indicate that the bears are getting ready to challenge the strategic support at 1225.
