Gold prices are slightly lower in afternoon New York trading, suffering from a bounce in the U.S. dollar index. XAU/USD hit the highest level in nearly 4 weeks earlier but the expected resistance at $1259 kicked in and blocked the bulls’ way. The market is currently fluctuating around the $1255 level, the bottom of the daily Ichimoku cloud.

The bulls have momentum on their side since the market bounced off a key support zone in 1208/5. However, as I mentioned in my weekly analysis, there is resistance at 1259 and that is likely to extend to 1264, the top of the daily cloud. Technically, Ichimoku clouds not only identify the trend but also represent support and resistance zones. From here, the market is either going to break up past 1264 or fall back to the 4-hourly Kijun-Sen (twenty six-period moving average, green line).

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