Gold gained some ground against the greenback on better-than-expected Chinese trade data and growing perception that Fed might continue its stimulus program if growth doesn't meet its targets. Although some investors think that the most recent economic data from the US suggest the economic recovery is not resilient enough to reduce stimulus, others believe that the Federal Reserve will cut its monthly bond purchases of $85 billion by $20 billion at its September meeting. Comments from Fed policy makers show that they would like to begin to reduce aggressive monetary stimulus sooner rather than later but they need an economic reason to do so. We know that the central bank has been too optimistic about the economy in recent years so we might see some changes in their plan. According to minutes from the FOMC's December meeting, several members said “it would probably be appropriate to slow or to stop purchases well before the end of 2013”. Because of that I think they will make a move in September, but it could be smaller than the market players initially thought. From a technical perspective, I think we are going to reach the 1315 level which I pointed out yesterday. The first challenge will be waiting the bulls at this level where the top of the Ichimoku cloud (4-hour chart) and the (short term) descending trend line coincides. If the XAU/USD pair breaks and holds above the Ichimoku cloud, the next targets will probably be 1326 and 1334.07. If the bulls encounter heavy resistance and prices reverse, expect to see support at 1305.95, 1300 and 1289.
