Gold (GLD) prices rose $22.13 an ounce yesterday, recovering most of last week's losses, on speculation that the U.S. Federal Reserve will not hint at a June rate hike at its two-day policy meeting which starts later today. The greenback was also pressured by weaker-than-expected U.S. services sector data. Markit's flash U.S. services purchasing managers’ index came in at 57.8, down from the previous month's 59.2.

Yesterday's rally pushed us back into the middle of the daily Ichimoku cloud. Technically, trading within the borders of the Ichimoku cloud on the daily time frame indicates that the market is still looking for a direction. The XAU/USD pair has been stuck in a trading range of 1174 to 1225 for more then a month and it seems that the fight between market forces will continue until we get a clear signal from the Fed.

Apparently the bulls don't want to lose their strategic castle in the 1174/1 region because that would give the bears an advantage they need to drag prices to 1166 and then 1159. Similarly, sellers increase pressure every time XAU/USD approaches the 1211 level. I think a sustained break above this level would give the bulls the extra momentum they need to test the 1214.50 and 1225 resistance levels. 1225 is the key level for the bulls to pass in order to challenge the bears at the 1240 battle field. The XAU/USD pair is testing the 1198/7 support (the area that the clouds occupy on the 4-hour chart) at the moment. If it fails to hold, prices may head back to the 1193/1 zone.