The XAU/USD pair closed Wednesday's session slightly higher than opening after two consecutive days of losses. The pair found support around the 1295 level and turned north after weaker than expected economic data out of the United States triggered some profit taking. Report released by the Fed showed that industrial production advanced only 0.2% (less than expectations of 0.5%) and capacity utilization rate stayed at 79.1%.
Although gold gained some ground against the American dollar during yesterday's session, the market is still feeling the bearish pressure of the most recent steep declines. Breaking below the 1320 support level -where the Ichimoku clouds resided on the 4-hour time frame- had altered the technical outlook. The pattern on the daily time frame suggests that the bulls are weaker than bears.
In order to ease the selling pressure and head towards the 1312 level, the bulls have to break through the 1303/6 area. Only a close above 1312 could give the bulls the extra power they need to tackle the next critical resistances at 1315 and 1320. If the bears parry the bulls' attacks and drag prices back below the 1297 level, then the market will probably retest the 1292 support level. They will need to capture this fort so that they can start a journey to 1286. Today sees release of important economic reports from the United States such as building permits, housing starts, Philadelphia Fed manufacturing index and unemployment claims, therefore expect some volatility.