Gold prices dropped $6.52 an ounce on Tuesday but remained within the trading range of the past eleven days. XAU/USD tested the support at around the $1273 level and was able to stay above the 4-hourly Ichimoku cloud. The key levels remain unchanged, as the market continues to move between the $1283.50 and the $1263 levels.
We have seen pretty much sideways action in gold recently, but ultimately the market will reach a point where it will simply have to break one way or the other. XAU/USD is trading above the Ichimoku cloud on the H4 chart, and the Tenkan-sen (nine-period moving average, red line) and the Kijun-sen (twenty six-period moving average, green line) are positively aligned. It looks as if the market is going to make another attempt to pass 1283.50 today.
The bulls have to push through 1283.50 if they intend to make an assault on 1288. Breaching this barrier is essential for a bullish continuation towards 1292. To the downside, keep an eye on the 4-hourly cloud. If the market breaks down below 1273 and takes out yesterday’s low, then it is likely that we will visit the support at 1267. A daily close 1267 implies that the 1263/0 area will be the next target.
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