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Forex pairs in this Article » XAU/USD
By: DailyForex.com

Gold prices declined yesterday but remained within the last two days of trading range as end of year holiday effects started to be felt. Although prices are under pressure after Fed's taper decision, we may not see any true momentum while the market volume is decreasing. I believe that this tight range will contain the market in the short-term. Lately, falling prices put the precious metal back in the spotlights.

There are lots of ideas and predictions on future gold prices and I think the gold market will remain choppy for the next few weeks. At the moment, investors believe that the U.S. economy is getting close to being able to stand on its own and as a result the market is paying extra attention to positive economic indicators. Last week, the Federal Open Market Committee took the first step toward unwinding its massive stimulus and announced that they will reduce monthly bond purchases to $75 billion from $85 billion starting in January.

Looking at the charts from a purely technical point of view, I think the XAU/USD pair will continue to respect the descending channel it has been running in since July. Price pattern on the charts also suggests that rebounds are weakening. Therefore, I think it is too early to say that the bearish trend -which began in October 2012- is over. In order to confirm bearish continuation price will need to close below the June 28 low of 1180.21. If that happens, sellers will be aiming for 1160 and 1140. I believe the 1140/35 support zone will be critical because once that is broken there will be little to slow this pair down until we reach the next support at the 1085 level.

XAUUSD Weekly 122413

To the upside, there is an interim resistance at the 1207 level. Climbing above that level means the pair will revisit 1213. If the bulls break through, they might be able to gather enough strength to tackle the 1225 resistance. A daily close above the 1225 resistance could increase buying pressure and give the bulls a chance to march towards the 1237 level.

XAUUSD H4 122413

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