Gold prices dropped $9.53 an ounce yesterday, giving up all of the gains made in the previous session, as the dollar firmed and U.S. equities climbed. The XAU/USD pair initially rose during Tuesday’s Asian session, at one point traded as high as $1219.94 an ounce, but failing to break through $1220/19 zone weighed on the market. As a result, prices returned to the $1208/5 area as expected.
At this point, there isn’t much to say as my previous analysis is still valid – the upside potential will be limited until prices passes through 1220/19. Trading within the borders of the daily Ichimoku cloud suggests that prices might go back and forth as the market looks for a direction. If XAU/USD breaks below 1208/5, we will eventually test the 1200-1199 zone and possibly the 1195 level. This area (between the 1205 and 1195 levels) is occupied by the Ichimoku cloud on the 4-hour chart, so it will play an important role. The bulls will need to push prices back above 1214/3 if they intend to make a fresh assault on the 1220/19 region. Penetrating this barrier could foreshadow a move towards the 1225 level.
