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

The XAU/USD pair (Gold vs. the American dollar) fell precipitously after Federal Reserve President Ben Bernanke said the central bank could reduce its asset purchases this year and end it in 2014 if the employment outlook shows sustainable improvement. Bernanke made his comments at a press conference after the Federal Open Market Committee announced that it left the monthly pace of bond purchases unchanged at $85 billion. Chairman Bernanke said “If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year. We will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year”. It is very clear that the FOMC members want to slow down the quantitative easing program but they also want to avoid creating expectations that their retreat will be a uniform process. In other words, how the Federal Reserve plays its cards will depend on the future economic data. Nevertheless, many investors are recognizing that the Fed is going to reduce bond purchases later this year and this is negative for gold prices. The XAU/USD pair accelerated its decline after breaking below the support level of 1360 and also closed below 1354.50. Because of that, I think the pair will be heading towards the 1338 support level next. Since the XAU/USD pair has paused or reversed at this same price level since mid-April, it is likely that we will see some support at that point.

XAUUSD Daily


However, the 1354.50 level will be the key for a bearish continuation. If gold prices end the week below this level, the bulls' defense at 1338 may not be able to hold the bears' advance. If 1338 support gives way, I think that we will see 1320 printing the screen. If the bulls manage to defend 1338 and prices reverse, expect to see resistance at 1354.50, 1360 and 1370.

XAUUSD 4hr


comments powered by Disqus
Trading Center