By: DailyForex.com

The XAU/USD pair (Gold vs. the American dollar) closed yesterday's session with a loss as caution set in ahead of high impact economic data releases this week. The recent price action shows that market participants want to see the outcome of a two-day meeting of the Federal Open Market Committee meeting which begins today. There is no press conference after the announcement so we will have only the official statement as an explanation of the policy decision. Because of that, I don't expect much new from this meeting, though another $10 billion cut in the monthly asset purchase program to $25 billion appears to be assured.

Meanwhile, the developments in the Middle East and Ukraine will continue to be on investors' radars. We might see some flight to safety due to fear of further escalation in geopolitical tensions. American and Ukrainian officials said Russia is placing more of its forces close to the border to provide extra support to the separatists. Not surprisingly, any potential for increased military action is likely to put a floor in the precious metal's trading range.

XAUUSD Daily 72914

From a technical point of view, I think the pair will have a hard time gaining traction in either direction at this point. We have a bullish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) cross on the 4-hour chart but we have a bearish cross on the daily time frame. In addition, prices currently reside on the different sides of the clouds on both charts. However, shorter term charts suggest that a test of 1315.74/1318.50 is likely if the 1312 resistance level is cleared. Beyond 1318.50, the bears will be waiting at 1324.50. If the bulls run out gas and prices start to fall, expect to see some support between 1299.30 and 1297. The bears will need to drag the XAU/USD pair below 1297 in order to start a journey towards the 1292 support level.

XAUUSD h4 72914

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