By: DailyForex.com
Gold prices ended Monday's session up 0.07%, or $7.50, to settle at $1064.70 an ounce as some investors locked in profits on the recent downswing which dragged the market to a six-year low. Price action we saw yesterday suggests that market players investors don't want to take big risks ahead of key data releases from the U.S. Last week's data from the Commodity Futures Trading Commission (CFTC) showed that speculative traders on the Chicago Mercantile Exchange reduced their net-long positions in gold to 16302 contracts, from 34399 a week earlier.
The XAU/USD pair continued to edged higher in Asian trade as shorter-term charts turned bullish but as you can see, the Ichimoku clouds on the 4-hour time frame is blocking the bulls' way. Like I said in my monthly analysis, an upside reaction was overdue, though the broader directional bias remained weighted to the downside. From an intra-day perspective, the market has to break through the resistance in the 1075.50 - 1072.50 region -where the bottom of the 4-hourly cloud and a short-term descending trend-line converge- in order to proceed to the 1081.55 level.
If price can push back up and close above this level we might see a bullish continuation towards the 1087 level. To the downside, the initial support stands in the 1066/3 region. If the aforementioned resistance in 1075.50 - 1072.50 is not surpassed, XAU/USD will eventually return there. Breaking below 1063 would imply that we are going to revisit the 1054 level. Based on the charts, once gold drops below 1054, the next obvious support level is around 1045/2.
