The major event of the last trading day of the week was the release of non-farm payrolls data. Although the XAU/USD (Gold vs. the American dollar) pair fell for most of the week, it erased some of earlier losses during the Friday session after July payrolls growth came in short of expectations. Data from the Labor Department report showed that that the U.S. economy added 209K jobs (below economists' expectations for an increase of 231K) and unemployment rate rose to 6.2%. Although weaker than anticipated data curbed speculation of a hawkish stance from the U.S. Federal Reserve, I don't think this report is a disaster - as this is the sixth straight month of 200K+ gains.
Despite growing conviction that the dollar is likely to strengthen, pullbacks in major stock markets will certainly be another thing to watch. Recent losses raised some concerns about a stronger correction so if this becomes a real issue, people may start taking money off the table in equities and use it to bolster their gold holdings. Friday's data from the Commodity Futures Trading Commission (CFTC) showed that speculative traders on the Chicago Mercantile Exchange reduced their net-long positions in gold to 139153 contracts, from 146146 a week earlier
Although the market found some support around the 1277 level, the XAU/USD pair has to push its way through the 1303 - 1312 resistance zone in order to gain more momentum. But before that, the bulls will need to break the first barrier at 1297 and hold prices above that. Since that would carry the market beyond the Ichimoku clouds on the 4-hour time frame, pressure from bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) crosses might ease. On the other hand, closing below the 1277 support would open the doors to the 1268 level. If the bears capture this strategic camp, there will be little to slow this pair down until we reach the next key support at the 1240 level.