Gold started the week lower as worries that the U.K. may leave the European Union abated after surveys show ‘remain’ sentiment gaining steam. Although the latest polls showed a shift towards supporting the EU membership, the outcome of the referendum is very difficult to predict. In the meantime, market participants will be keeping a close eye on Federal Reserve chair Janet Yellen, who testifies before the Senate Banking Committee today.
Technically, trading above the Ichimoku clouds on the weekly, daily and 4-hour charts gives the bulls an advantage, though it appears that the XAU/USD pair will remain range bound for the time being. Down below we have the 1280/77 region which has been supportive recently, and now it is overlapped by the 4-hourly Ichimoku cloud. If the market invalidates this support, it could be possible to see prices returning the 1270-1268.50 where the top of the daily cloud sits. A break below 1268.50 might lead to a fall down to around 1261.
The first hurdle gold needs to jump is located in the 1300-1298 area. Clearing this resistance would make me think that the bulls are ready to tackle the next barriers at 1304 and 1307.50. A daily close above 1307.50 might give the bulls the extra strength they need to march towards the 1320/16 zone.
