Gold prices rose $5.18 an ounce on Wednesday as a lower U.S. dollar index prompted a bit of buying interest in the gold market. Federal Reserve Bank of St. Louis President James Bullard said financial market information suggests the Fed’s latest interest rate projections are “too hawkish for the current macroeconomic environment.” World stock markets were mostly weaker yesterday on global trade concerns after U.S. President Trump said he was not willing to make a deal along the lines of what Beijing was seeking.
XAU/USD reached the 1199 level after prices got back above the resistance at 1196. The market has been following a descending channel lately. The bulls have to break through the 1200-1199 area, where the Kijun-sen (twenty six-period moving average, green line) and the top of the descending channel coincide on the H4 chart, to march towards 1204/3. If prices successfully penetrate the 4-hourly Ichimoku cloud, then the market will be aiming for 1208. The bulls have to produce a daily close above 1208 to gain momentum for 1214-1212.40.
To the downside, keep an eye on the 1196/5 zone. If XAU/USD breaks below 1195, which happens to be the Tenkan-sen (nine-period moving average, red line) on the H4 chart, the market will probably revisit 1191/0. Breaking below 1190 opens up the risk of a drop to 1186. Once below there, the market will be targeting the 1182-1180.50 area.