By: DailyForex.com
Gold prices surged to their highest level in a year as investors continued to pull money out of equities and flocked to the safety of the precious metal. Lately, the XAU/USD pair has been climbing relentlessly on continued jitters in global equity markets, dollar weakness and improved technical outlook. The rally in prices accelerated after breaching a key resistance at $1213 provided buyers the catalyst they needed. The XAU/USD pair traded as high as $1263.27 an ounce before pulling back to $1238.90 level.
XAU/USD is currently hovering above the 1235/2 area -where the Ichimoku cloud resides on the 30-minute chart- as the market tries to digest the most recent gains. The candlesticks on the 4-hour chart, with long higher shadows indicate that there is a certain amount of pressure in the 1160/50 region. In other words, the buyers will need to push prices back above 1250/48, so that they can find another chance to test the resistance at around 1260.
To the downside, keep an eye on the 1235/2 zone. If this support is broken, we will probably grind lower towards 1225/3, a former resistance which may turn into a good support. Closing below the 1223 level could see a retracement all the way back to 1213.
