After three consecutive days of gains, the XAU/USD pair (Gold vs. the American dollar) hit the highest level in twelve days. Yesterday the pair broke through the 1268 resistance level as disappointing U.S. economic data and escalating violence in Iraq burnished the precious metal’s safe-haven appeal. Data released from the Commerce Department showed that retail sales rose only %0.3 in May and the Labor Department reported that the number of first-time applicants for jobless benefits increased by 4K to 317K. Some investors abandoned stocks and flocked to the gold market after President Barack Obama said he won't rule out U.S. military action in Iraq against militants.

XAUUSD Daily 61314

It looks like heightened risk aversion is likely to provide support to gold in the short-term but now prices are approaching to the 1277 level which could trigger some profit taking. This level had been a bottom for the market during April and May so I think it will be a tough nut to crack. Beyond this barrier, there will be significant resistance at the 1286(8) level where the descending line and 50% retracement (based on the distance between 1182.35 and 1392.04) coincide. Only a sustained break above 1288 could extend the bullish movement towards the 1297 level which happens to be the bottom of the Ichimoku cloud on the daily time frame. However, if the market encounters strong resistance around the 1277 level and prices start to fall, support can be found at 1268 and 1260/56.

XAUUSD H4 61314

Related Articles
  1. Term

    What's Recapitalization?

    Recapitalization is the restructuring of a company’s debt and equity mixture.
  2. Term

    Public Goods & Free Riders

    A public good is an item whose consumption is determined by society, not individual consumers.
  3. Term

    What are the Different Types of Financial Advisors?

    There are two primary types of financial advisors: investment advisors and investment brokers, who work for broker-dealers.
  4. Economics

    What are Acquisition Costs?

    A company can recognize acquisition costs as those costs used to buy property and equipment.
  5. Professionals

    7 Tips for Year-End Financial Planning

    There is always a rush to get financial planning tasks done at year's end. Here are some tips to help ease the crunch.
  6. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  7. Professionals

    Top Tips for Helping Clients Through a Divorce

    It may take a delicate touch to properly assist clients who are going through a divorce. Here are some tips.
  8. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  9. Brokers

    How RIAs and Independent Broker-Dealers Differ

    There are many types of financial planners. Here we break down what sets RIAs apart from independent broker-dealers.
  10. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  1. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  2. Can working capital be negative?

    Working capital can be negative if a company's current assets are less than its current liabilities. Working capital is calculated ... Read Full Answer >>
  3. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  4. Are Cafeteria plans taxable?

    Whether the benefits you receive through your employer-sponsored cafeteria plan are taxable depends entirely on which benefits ... Read Full Answer >>
  5. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  6. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!