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

The XAU/USD pair (Gold vs. the American dollar) fell for the week but managed to close just above the 1225 support level on Friday, even after the economic data out of the United States beat forecasts. Data released by the Labor Department showed that the U.S. economy added 203K jobs in November, well above expectations of 185K, and the unemployment rate fell to 7% from 7.3%.

According to data released by the University of Michigan, preliminary December consumer sentiment index rose to 82.5, from 75.1 in November. It seems that the Fed’s possible reduction in its asset purchase program in coming months is already priced into the gold market. Considering the fact that gold prices were around the 1660 level almost one year ago, I think we might start feeling some pressure from short-covering as big investors lock in gains before year’s end. Friday's data from the Commodity Futures Trading Commission (CFTC) show that speculative investors on the Chicago Mercantile Exchange have increased their short positions for the fifth consecutive week.

XAUUSD Daily 12913

From a technical point of view, I think the bulls will need to break and hold above the 1252 level -which has been blocking the pair's way for the past two weeks- in order to gain enough momentum to challenge the bears at 1268 but before that the 1237 will be the first hurdle. To the downside, there will be support at 1225 and 1213. If this recent (1213) floor is breached, selling could continue to the next level of support around 1200.

XAUUSD H4 12913

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