Gold prices rose $8.86 an ounce on Thursday as a retreat in the dollar took some pressure off the yellow metal. The greenback eased after soft inflation data helped alleviate fears of faster interest rate hikes by the Federal Reserve. XAU/USD reached a strategic technical resistance in the $1322-$1320 area after the market found enough support at $1310 and penetrated the 4-hourly Ichimoku cloud. Equities in the Asia Pacific region continued to recover today, following gains on Wall Street.

The shorter-term charts are slightly bullish at the moment, with the market trading above the Ichimoku clouds on the H4 and the H1 time frames. Positive Tenkan-sen (nine-period moving average, red line) – Kijun-sen (twenty six-period moving average, green line) crosses, along with Chikou Span/Price crosses in the same direction on the 4-hourly and hourly charts, suggest that a test of 1326.50-1325.60 is possible if prices successfully hold above 1322. A sustained break above 1326.50 would open the door to the 1336/4 where the bottom of the daily cloud sits.

To the downside, keep an eye on the intra-day support in 1316.71-1316, the confluence of the 4-hourly Tenkan-sen and the top of the 4-hourly cloud. If this support gives way, prices will be heading back to the 1312.12-1310 area. Not too far from there we have a strategic support in 1308/6, and the bears will have to capture this area to challenge the bulls waiting on the 1300-1296 battlefield.