Gold prices rose $4.31 an ounce on Wednesday as the dollar came under pressure after Bloomberg news published a story about the Chinese government possibly reducing its buying of U.S. government bonds. XAU/USD traded as high as $1327.64 an ounce but it was unable to hold above the $1326.20 level. As a result, the market returned to the $1316-$1315.80 zone.
The long-term technical charts remain bullish, with the market trading above the weekly and the daily Ichimoku clouds. However, beware that the Tenkan-Sen (nine-period moving average, red line) and the Kijun-Sen (twenty six-period moving average, green line) are flat on the H4 chart, indicating sideways trading in the near term.
At this point, XAU/USD will have to either break through the 1326.20 level and challenge the next barrier standing in 1333 or drop below 1306/5 and pay a visit to the 1302 level. While a successful drop below 1302 would put more pressure on the market and open up the risk of a move towards 1298/4, a break up above 1333 would make me think that the bulls were ready to make an assault on the resistance at 1340.
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