Gold prices hit their highest level since May 22 during today's Asian session as investors scaled back expectations for more U.S. rate increases after Federal Reserve Chair Janet Yellen stressed that the policy was not on a pre-set course and they would respond appropriately to developments in international conditions and their impact on the economy. The XAU/USD pair initially headed back towards the 1179 level yesterday but found enough support to reverse the course and eventually closed above the 1193 level.

As anticipated, breaking up above the 1200 level pushed prices higher and consequently the market was able to test the crucial resistance at 1213. The general outlook is still positive, with the market trading above the Ichimoku clouds on all time frames. However, the potential upside is likely to be limited until the 1213 resistance -where the long-term bearish trend line originating in 2013 and a horizontal resistance converge- is convincingly broken.

Although I expect this area to hold prices in check today, I also acknowledge that we might see a push up to the 1225 level if this significant resistance is cleared. On its way up, the bears will be waiting at 1219. If the bulls run out of fuel and XAU/USD dives below 1205, then it could be possible to see the market retreating the 1200 level. The bears will have to drag prices below 1200 if they intend to put extra pressure on the market and make an assault on the 1193/1 zone. A break below 1191 might trigger a drop towards the 1186/3 support.