Gold prices rose for a second straight session on Thursday as the dollar extended losses and equities edged lower on news that U.S. President Donald Trump canceled a planned June meeting with North Korean leader Kim Jong Un. XAU/USD reached the $1306 level as expected after prices broke through the resistance at the $1300 level. In economic news, the National Association of Realtors reported that sales of existing homes decreased 2.5% to a seasonally adjusted annual rate of 5.46 million in April from 5.60 million in March.
The market is trading above the Ichimoku clouds on the H1 and the M30 charts; plus, we have positively aligned Tenkan-Sen (nine-period moving average, red line) and Kijun-Sen (twenty six-day moving average, green line) on the H4 time frame. The short-term charts suggest that a test of 1313/0, the confluence of a horizontal resistance and a six-week old bearish trendline, is likely if the market convincingly breaks through the resistance at 1306. A break above 1313 implies that the market will be targeting 1316 next.
On the other hand, if the market fails to sustain a break above the 4-hourly Ichimoku cloud, prices could return to test the support at 1300. A decline below 1300 could trigger further weakness and open a path to 1297/6. The bears have to produce a daily close below 1296 to make an assault on the 1287.40-1286 zone, where the bottom of the 4-hourly cloud sits. On its way down, expect to see some support at 1292.50.