The XAU/USD pair had a positive session but it seems that the adrenalin rush of a decision by the Federal Reserve to maintain the pace of bond purchases wore off. After a two-day policy meeting, the Federal Open Market Committee had said that continuation of the $85 billion asset-buying program ($40 billion of mortgage-backed securities and $45 billion of Treasury securities) was necessary to bolster the economy.
Fed's statement shows policy makers have concerns that early start to cutting economic stimulus would endanger the economic recovery process. Yesterday, data out of the United States were better than expected, especially Philly Fed manufacturing index and existing homes sales. Figures from the National Association of Realtors showed sales of previously owned homes increased 1.7% and the Federal Reserve Bank of Philadelphia reported that its manufacturing index climbed to 22.3 from 9.3 in August.
From a technical perspective, trading above the Ichimoku clouds (both on the daily and 4-hour time frames) is positive for the XAU/USD pair. However, since the Tenkan-sen line (nine-period moving average, red line) is still below the Kijun-sen line (twenty six-day moving average, green line) on the daily chart, I wouldn't eliminate the possibility of a pull back towards the 1345 support level before buyers step in and try to push prices higher.
Therefore, I think the key levels to watch today will be 1360 and 1380. If the bears take over and drag prices below the 1360 support level, support may be found at 1353, 1345 and 1336/3 (which happens to be the 38.2 retracement level based on the bullish run from 1180.21 to 1433.70). A sustained break above the 1380 level could increase speculative buying pressure. If that is the case, it is quite possible that the pair will continue its bullish tendencies and retest the 1395 resistance level.
