Gold strengthened against the American dollar for a second session on Thursday after comments from Russian President Vladimir Putin boosted anxiety that tensions over Ukraine could escalate. Putin said “If it’s true that the current regime in Kiev sent the army against citizens inside its country, then it is a very serious crime against its own nation. It will have consequences for the people who make such decisions, including relations between our countries. We’ll see how the situation develops and we’ll make conclusions based on the reality on the ground”.
The headlines from the region overshadowed upbeat economic reports out of the United States and helped gold to bounce off of the 1268 support level. As I pointed out in my previous analysis, the 1268 support level which caused prices to stop or reverse several times in the past eleven months is a critical key for a bearish continuation. Although the continuing crisis in Ukraine is likely to keep a floor under the market, there are some tough resistance levels ahead such as 1300, 1307 and 1312.
Since the pair is trading below the Ichimoku clouds on both the daily and 4-hour time frames, the bulls' advance might be slower than expected. If the pair starts to retreat, look for support around the 1285/3 area where the Tenkan-sen line (nine-period moving average, red line) and the Kijun-sen line (twenty six-day moving average, green line) currently reside on the 4-hour chart. Breaking below that would indicate that the market may want to test 1277 again. In order to gain more traction and reach the 1300 resistance level, the bulls will have to defend their new camp (1285/3) and push prices above 1293. A daily close above 1300 would make me think that the 1307 and 1312 levels will be the next possible targets.
