The XAU/USD pair closed the week higher after two consecutive weeks of losses as the Ichimoku cloud on the daily time frame continued to offer some resistance. Although gold prices spent most of the week below the 1300 support level, Friday's (arguably) weaker-than-expected non-farm payrolls report helped gold to recover some of earlier losses and close at $1303.39 an ounce.
According to data released from the Labor Department, the U.S. economy added 192K jobs in March and the jobless rate held at 6.7%. I think these figures are encouraging but still it is obvious that people were hoping to see something above 200K. If the market participants feel that the Federal Reserve is going to be accommodative for a long time, gold prices will remain supported.
Last week, I had warned my readers about a possible reaction and told not to chase gold lower. However, I think it is too early to announce that the bulls have regained their strength. I believe Monday and Tuesday trading sessions will give us a clear picture about the sentiment. Friday's data from the Commodity Futures Trading Commission (CFTC) show that speculative investors on the Chicago Mercantile Exchange reduced their net-long position in gold to 100145 contracts, from 117317 a week earlier.
On both the daily and 4-hour charts, the XAU/USD pair is still trading inside the Ichimoku cloud but we also have a bullish Tenkan-sen line (nine-period moving average, red line) - Kijun-sen line (twenty six-day moving average, green line) cross on the 4-hour time frame. From an intra-day perspective, I believe the key levels to pay attention will be 1307 (a former support/resistance) and 1293.
If the bulls push the pair above the 1307 level, I think we will gain enough traction to visit the 1314 level. A sustained break above this zone would prolong the bullish momentum and clear the path towards 1320/8. If the pair encounters heavy resistance and breaches the 1293 support level, we will probably test 1289 next. Below that, there will be support at 1277 and closing behind this level would make me think that the bears are aiming for 1268 at least.