Gold prices rose for a second straight session on Thursday and reached their highest level since April 15 as weakness in the American dollar and intensifying unrest from Iraq to Ukraine buoyed the metal’s safe-haven appeal. In my previous analysis I had mentioned the importance of the 1286/8 resistance area and pointed out that it was technically possible to see a bullish continuation targeting the $1297 and $1312 levels.
Not surprisingly, the pair accelerated its ascent right after we climbed above this critical resistance level. The bulls also drew strength from President Barack Obama’s comments on assisting the Iraqi army. He said “We will be prepared to take targeted and precise military action if and when we determine that the situation on the ground requires it”. Geopolitical tensions usually increase the demand for gold and it looks like speculators are using this opportunity.
From a purely technical point of view, it is possible that prices will continue its bullish tendencies and try to push through the 1328/31 resistance area. Climbing above this area where the top of the Ichimoku cloud currently resides could signal a run up to 1342 or higher (1352). However, as a result of yesterday’s price action, the XAU/USD pair entered the clouds on both the weekly and daily time frames. That means there will be very tough challenges waiting the bulls. To the down side, support can be found at 1312 and 1306. A close below 1306 would indicate that it is technically possible to see pair revisiting the 1300 - 1297 area.