We still hold our corrective weakness bias on Gold but its ability to reverse part of its last week losses and climb back above the 1,329.25 level, its Dec 16'2010 low suggests a recovery higher could be developing. It is now spotting a hammer candle (reversal signal). This however is with one caution, that a firm hold above the 1,329.25 level must occur thus preventing a return to the 1,307.60 level, traded on Friday. Above the former (1,329.25) will open the door for more strength towards the 1,152.95 level, its Jan 24'2011 high with a violation of there pushing the commodity further higher towards the 1,378. 80 level followed by the 1,392.25 level, its Jan 13'2011 high. We expect a cap at the latter to turn the commodity back lower but if that fails, a run at the 1.431.28 level and the 1,450.00 level could occur. Alternatively, below the 1,307.60 level will turn our focus to the 1,300.00 level, its big psycho level. We expect this level to provide a strong support and turn the commodity back up on an initial test, but if it snaps, expect Gold to decline further towards its long-term rising trendlineat 1,288.75.

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