Gold Price Analysis - Sept. 9, 2014

The XAU/USD pair (Gold vs. the American dollar) closed yesterday's session with a loss as the market continued to encounter resistance around the $1272.90 level. Although the pair tried to hang on to the gains triggered from a bleak non-farm payrolls report, weakening demand for the precious metal hindered the bulls' advance. It appears that friendly risk environment and prospects of diplomatic solution to the Ukraine crisis weighted on the market as well.

Increasing appetite for the American dollar tends to weaken the appeal of commodities such as gold but bear in mind that the bulls will try to take advantage of flare-ups in the Middle East region. However, the XAU/USD pair has been trading in a bearish channel since around the middle of July when it topped out at 1344.92 and rallies caused by geopolitical events failed to have a lasting impact. Until the technical outlook changes, bounces towards the upper band could provide selling opportunities in this market.

XAUUSD Daily 9914

Right now prices are hovering just above the bottom of the channel so I will be keeping an eye on the 1260 and 1252 levels. We are trading below the Ichimoku clouds on the weekly, daily and 4-hour charts and we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen (twenty six-day moving average, green line) crosses. That means, if the XAU/USD pair successfully breaks below the 1252 support level, it is likely that the market will test the support at 1246.80. The bears have to capture this point so that they can expand their territory and reach the 1240 level. To the upside, the first hurdle gold needs to jump is located around the 1260 level. Beyond that, the bears will be waiting at 1268 and 1272.90(1274). Only a close above this area could give the bulls the extra strength they need to tackle the 1280 level.

XAUUSD Week 9914

Alp Kocak
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.