Gold prices ended Thursday's session down $7.87 as investors flocked to the greenback on expectations of tighter monetary policy in the United States. The U.S. Department of Commerce reported that gross domestic product expanded at an annual rate of 2.3% in the second quarter and first-quarter GDP was also revised up to 0.6% from an initial reading of a 0.2% contraction. Although Q2 reading failed to beat estimates, markets welcomed the expansion in the Q1.

Since market sentiment is ultimately driven by the possibility of a rate hike in September, gold is struggling to move away from the five-and-a-half-year lows. Trading below the Ichimoku clouds on the weekly, daily and 4-hour time frames indicate that the downside risks remain. Negatively aligned Tenkan-Sen (nine-period moving average, red line) and Kijun-Sen (twenty six-period moving average, green line) lines on all time frames also weaken the technical outlook.

From an intra-day perspective, I expect the market to remain under pressure unless prices climb back above the 1093.52 – 1088 area. If the XAU/USD pair breaks below yesterday's low, then prices may grind lower towards the 1076/1 zone. Based on the charts, once gold drops below 1071, the next obvious support level is around 1062.85. To the upside, as mentioned above, the initial resistance levels stands at 1088 and 1093.52. Beyond that the 1103 and 1109.70 levels stand out but since the 4-hour Ichimoku cloud sits above prices, I will pay more attention to the area it occupies than specific levels.