Gold prices (XAU/USD) rose 0.46% over the course of the week and settled at $1320.26 an ounce on Friday. Without doubt last week’s main event was release of the government’s jobs report. Although Thursday’s stronger than anticipated figures stoked speculation of a hawkish stance from the Federal Reserve, the adrenalin rush wore off quickly (as I try to remind from time to time, “it is not the news but the market reaction to news that matters”). While some feel solid improvements in the U.S. economy bolsters the case for Federal Reserve officials to raise the interest rates earlier than they forecast, others think that the central bank will not be in a hurry to alter the monetary policy.
The XAU/USD pair has been resilient to the bears’ attacks since the market formed a bottom around the $1240 level. As a result the pair printed higher highs and higher lows for four consecutive weeks. However, encountering resistance in the 1328/31 area (former support/resistance) was not a big surprise of course. For the last couple of weeks, I have been repeating that there is significant resistance between 1328 and 1331. I still think that clearing this resistance is necessary if the bulls want to win the battle expand their grounds. In that case, it is technically possible to see a bullish continuation targeting the 1334 and 1340 levels.
If the bears manage to protect the 1328/31 barrier and force prices to retreat, support can be found between the 1312 and 1306 levels. Technically, a close below 1306 would indicate that it is possible to see pair revisiting the 1300 - 1297 area. Once below 1297, there will be little to slow this pair down until we reach the next key support at the 1286 level.