Gold prices edged slightly higher on Wednesday, snapping a six-day losing streak, as a retreat in the dollar helped the metal trim a portion of earlier losses. U.S. housing data came in weaker than expected but minutes from the Federal Reserve’s October 27-28 policy meeting showed that most policy makers believed conditions to begin the policy normalization process could well be met by the time of the next meeting. Some others, however, were “concerned about a potential loss of momentum in the economy and the associated possibility that inflation might fail to increase as expected.”

The XAU/USD pair bounced off the bottom of the descending channel originating in mid-2013 and returned to the previous support now flipped to resistance at 1079. The bulls have to push prices beyond this significant barrier if they intend to revisit 1083.35 and possibly 1089/7. A break above 1089 could pave the way towards 1096/4. The 4-hourly Ichimoku cloud currently occupies the area between 1083.35 and 1103.

Technically, Ichimoku clouds not only identify the trend but also define support and resistance zones. The thickness of the cloud is relevant, as it is more difficult for prices to break through a thick cloud than a thin cloud. If the XAU/USD pair fails to break through 1079, prices may retreat to the 1072 level which happens to be the Tenkan-Sen (nine-period moving average, red line) on the 4-hour time frame. The market has to get down below there in order to continues the downside and test the support in the 1065/2.85 area.