Gold prices ended Wednesday’s session down $8.85 as a renewed appetite for riskier assets pushed market players to lock in profits and roll their funds into equities. The Dow Jones Industrial Average closed above 20000 for the first time, the S&P 500 rose 0.8% and the Nasdaq Composite gained 0.99% while the dollar index fell to a seven-week low.
Apparently traders in the Forex market focused more on Donald Trump’s protectionist policies and the negative impact they could have on the greenback. Yesterday, the XAU/USD pair broke down below 1208/5 and tested the support at around the 1195 level as expected. Although this area where the bottom of the 4-hourly Ichimoku cloud resides held the market, we had a slight bounce so far.
In other words, unless prices climb back above the 1208/5 area, the risk of a break below 1195 remains high. If this support is broken, then prices will possibly retreat to the 1190.50-1187 zone. Dropping through 1190.50-1187 could open a path to the 1179/6 area. On the other hand, if XAU/USD jumps above 1208/5, I think the bulls may have a chance to tackle the 1214/3 resistance zone. The market will need to pass through this region in order to approach the critical barrier standing in the 1220/19 area.
