Gold prices fell $7.50 an ounce on Tuesday as the dollar’s rebound continued to weigh on the market. XAU/USD retreated to the 4-hourly Ichimoku cloud as anticipated after prices broke blow the support in the $1316-$1315.80 area. Gold is currently trading at $1309.89, lower than the opening price of $1312.21.
Prices are still above the weekly and the daily clouds, and the Tenkan-sen (nine-period moving average, red line) and the Kijun-sen (twenty six-period moving average, green line) are positively aligned. However, note that the short-term charts have turned slightly bearish since the market dropped below 1315.80, the bottom of the hourly cloud. If XAU/USD does not recover and get back above the 1316-1315.80 area, the support in 1309/8 will be in danger. A break below there could foreshadow a move to 1306/5, which represents the 23.6% retracement of the recent bullish run from 1236.40 to 1325.91. The bears have to capture that strategic camp to tackle 1302 and 1298/4 (the bottom of the 4-hourly cloud)
On the other hand, if the market finds support from the 4-hourly cloud and climb back above 1316, the Kijun-sen on the H4 chart, then the bulls will be aiming for 1326.20-1323. The bulls have to produce a daily close above 1326.20 to gather momentum for 1333. A break through there brings in 1340.
