The XAU/USD pair fell to its lowest level in two weeks as a rally in U.S. equities and a stronger dollar dim gold’s appeal. The U.S. dollar and stocks climbed after Fed policy makers altered their guidance on the likely path of interest rates to give them more flexibility to react to changes in the economy. The Federal Reserve dropped its assurances about waiting a "considerable time" and raised its assessment of the labor market. "The committee judges that it can be patient in beginning to normalize the stance of monetary policy" the Federal Open Market Committee said at the conclusion of a two-day meeting yesterday.

The Fed took another step to improve confidence in the markets and it appears that rate hike debates won't start for at least the next couple of months. The Fed's promise to be patient could provide the bulls an opportunity to push the XAU/USD higher but I think the gains will be limited while slumping energy prices which threatens to push inflation further below the Fed’s 2% target and persistent uptrend in major stock markets continue to weight on the market.

From a technical perspective, the daily chart suggest that the market is neutral while trading inside the Ichimoku clouds. In addition, prices are between the Tenkan-sen (nine-period moving average, red line) and Kijun-sen (twenty six-day moving average, green line) on the same chart and as you can see both lines are flat at the moment. The outlook on the 4-hour time remains poor but I think the bears will have to capture the 1186 support level in order to gain enough momentum to test 1174. Closing below the 1174 support on a daily basis would indicate that 1163 might be tested soon after. Similarly, the bulls will need to break through the 1203 resistance level if they don't want to give up. I think breaching this barrier will pave the way towards the 1212 resistance. Beyond that, the bulls will be waiting at 1221.