Gold prices dropped $6.76 an ounce on Thursday, dragged down by a stronger dollar. The dollar pared some of its losses after fresh economic data suggested the U.S. economy sustained momentum going into the second half of the year. Some chart-based selling was also behind gold’s 0.55% drop yesterday. A failure to break through the resistance in the $1208-$1206 area encouraged sellers.
XAU/USD continues to trade below the daily Ichimoku cloud, but with no major fundamental news to drive the market, this range-bound nature will probably continue for now. Also note that the Chikou-span (closing price plotted 26 periods behind, brown line) is still above the 4-hourly cloud. If the 4-hourly cloud continues to be supportive, it is likely that the market will retest the aforementioned resistance in the 1208/6 zone. The bulls have to capture this strategic camp to challenge 1214-1212.40.
To the downside, keep an eye on the 1196/5 area, where the top of the 4-hourly cloud resides. Breaking below 1195 could foreshadow a fall to 1192. If XAU/USD falls through 1192, then the next target will be 1186, the bottom of the 4-hourly cloud.