Gold Returns From One-Month Low
Gold prices finished the first trading day of 2015 slightly higher as a larger-than-expected refuse in U.S. manufacturing data counteract the impact of a stronger dollar. The market originally dropped to its lowest level in a month but returned after the organization for Supply Management said its index of national factory activity declined to 55.5 in December from 58.7% a month earlier. Because the Federal Reserve tied future monetary policy (i.e. timing of interest rate hikes) to economic performance, traders give more attention to signs of slowdown in the economy.
The U.S. dollar’s strength across the board is working against gold but rebound off the $1170 support level suggests that buying interest continues to emerge on dips. The market spent most of the week inside the Ichimoku clouds on the daily time frame and it demonstrates that there is an intense battle going on between the bears and bulls. For the reason of that, I will be focusing on the 1212 and 1163 levels.
Resistance to the upward can be found at 1193.55 and 1203. Closing above the 1203 stage would simply that the short-term technical position is shifting to the upside but I think the XAU/USD pair has to push its way through the 1212 resistance area in order to gain enough traction to challenge the significant barrier at 1221. Alternatively, if the bears boost the pressure and prices fall below 1182/0, we may see the market testing the 1178/6 region once again. Then maybe, support 1163 will continue to remain as a key level to the down side.