Gold prices fell 0.38% on Tuesday, extending their losses to a second straight session, on expectations the U.S. Federal Reserve will slightly upgrade its economic outlook. In the latest economic data, the Conference Board's consumer confidence index came in at 90.9, up from the previous month's 86.4 and above expectations for a reading of 85.5. The Federal Open Market Committee's statement will be issued at the close of its two-day meeting today. It is not only the Fed that is coming up today; we also have U.S. second-quarter GDP and ADP employment data. The central bank will not provide new economic projections, and Chair Yellen isn’t scheduled to give a post-meeting press conference.
While the ongoing unrest in the Middle East and Ukraine continues to give temporary boosts, persistent rally in stocks dulls the shiny metal's attractiveness. The Ichimoku clouds on the 4-hour time frame have been hindering the bulls' advance for some time but the market is still feeling the support of the daily cloud. Looking at the long term charts from a purely technical point of view, (and based on the fact that the XAU/USD pair is trading inside the cloud on the weekly time frame) I expect this ying/yang to continue.
If the support around 1297 level remains intact and prices start to climb, expect to see some resistance between 1303 and 1306. In order to gain control, the bulls will have to force the market back above the 1312 resistance level on a daily basis. In that case, they could have a chance to tackle the next barriers at 1318.50 and 1324.50. However, if the market successfully breaks below yesterday's low, the pair may extend its losses and head towards the 1292 level. Closing below the cloud on the daily chart would suggest that a retest of 1277 is on the table
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