Gold prices ended Tuesday’s session up $13.81, boosted by falling stocks and a weakening U.S. dollar. Equities were dragged down by escalating concerns over the U.K.’s access to the European Union’s single market. The dollar slid to a one-month low after President-elect Donald Trump expressed concerns over a stronger dollar. The XAU/USD pair traded as high as $1218.80 an ounce before pulling slightly back to the current levels.
In my previous analysis, I had said that the bulls had the near-term technical advantage, and pointed out the possibility of a move towards 1220/19 on a break above 1208/5. Currently the market is trading within the borders of the weekly and daily Ichimoku clouds which overlap in the 1246/12 region. Because of that, the upside potential will be limited unless prices break up above the 1220/19 zone. If this resistance remains intact, a retracement downwards from here is highly likely. In that case, XAU/USD will probably visit 1212 and perhaps 1208/5 supports. The bears have to push prices back below 1205 so that they can make an assault on 1200. Diving through 1200 would indicate that 1195 will be the next stop.
On the other hand, if the bulls overcome the resistance in the 1220/19 zone, they will probably set sail for 1225. The XAU/USD pair has to push its way through 1225 in order to visit the 1232 level, which is the second significant barrier ahead. Closing above 1232 would imply that the bulls are getting ready to challenge 1237.
