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FXstreet.com (London) - Gold dropped off significantly last from touching all time highs of $1226 to faling below $1150 in trading yesterday.Dollar rally last week off optimistic jobs data made gold suffer. Gold, the safe haven asset class, is seen as attractive in times of a weak dollar, and as such throughout history, gold has been the asset-class of choice in times of crisis.
The recent gold surge was largely kicked off by India increasing its Gold reserves significantly in November, this fuelled speculation that other BRIC nations, and indeed non-BRIC nations, would be following suit. China boosting gold reserves is a constant consideration in the market although Peoples Bank of China has recently commented it views gold as expensive at these levels.
Spot Gold is currently quotes at 1165.23/73, slightly firmer today after clawing back some of its losses.
While Gold may be overbought, corrections do not necessarily mean a change in the long/mid-term trend, Saxo Bank Strategy Team postures: "Technically Gold is still much overbought but this has so far not stopped it from rallying further. Any signs of weakness could however lead to some position squaring.On a downside break support can be found between USD 1,150 and 1,130."
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