The pair of gold \ U.S. dollar last week closed higher than the opening price. The U.S. dollar lost some strength after economic data, published by United States last week, which was weaker than expected. According to a report announced by the University of Michigan about consumers, the confidence index fell from 82.7 to to reach 84.5.
The Labor Department reported that the PMI rose by 0.5%. Data from the Federal Reserve showed that the utilization capacity declined to reach 77.6 from 77.8. However, gold prices continued to hesitate in a narrow range. During the last week, investors did not have any idea about the yellow metal trend. Recent actions in the gold market suggest that the participants were in “watching mode” or preparatory mode before the meeting of Federal Open Market Committee (FOMC). The meeting might come by more of clarity about this matter. It seems that the Federal Reserve Bank in the United States is much closer to reduce the frequency of its purchases. The Fed is going to maintain an appropriate policy, which is likely this year, to ease the speculative demand of the precious metals.
The U.S. economy is addicted to quantitative easing. The economy is demanding higher doses of quantitative easing (which will had a bad impact on the market), while overdose should lead eventually to death. This fact is well known by the FOMC members. They also know that in the end, the central bank will feel that, the costs outweigh the benefits. Technically, gold price will be affected by the FOMC meeting.
In order to get some power, the bulls have to break the first strong support level at $1400 U.S dollar per ounce. After this level, we will watch a resistance at $1413 and 1420 U.S . dollar per ounce. Only a price-close over the level of $1420 could give the bulls extra power they need to reach the level of $1442 U. S dollar per ounce. If you encounter stiff resistance and gold prices began to decline, attention should be paid to the next support levels at $1370, 1360 and 1354 U.S dollar per ounce, which is more expected to happen. The later expectation is more applicable after the Asian stock market showed signs of improvement.