Gold prices ended Monday's session up $9.79, extending gains from last week driven by safe-haven demand as turmoil in global markets increased investor jitters. Market players seeking safety from falling oil prices and weakening global equities markets have been flocking to gold since the start of the year.
Technical buying pressure was also behind gold's advance yesterday. Breaking through the 1105.50 - 1103 resistance lured more buyers. As I mentioned last week, positively aligned Tenkan-Sen (nine-period moving average, red line) and Kijun-Sen (twenty six-period moving average, green line) lines on both the daily and 4-hourly charts, along with Chikou Span/Price cross in the same direction level improved the short-term technical picture. It appears that the XAU/USD pair will challenge the first target at 1113 as expected.
The outcome of the test of 1113 will probably confirm what will happen next. If prices can confidently break above 1113, it is quite likely that the market will proceed to the 1119 level, where the top of the daily Ichimoku cloud sits. Beyond that, the bears will be waiting at 1124. However, a failure to pass through 1113 could lead to some profit taking and drag XAU/USD back to the 1105.50 - 1103 region. The bears will need to capture this area so that they can march towards the 1098 level. If this support is broken, the market will aim for 1094 afterwards.
