The commodity may be preparing to put in a bottom as its weakness started from the 1,920.50 level is now running out of steam with a hammer candle now in place. Although Gold is still vulnerable to the downside, the presence of a hammer candle pattern (a bottom reversal signal) is suggestive of price exhaustion and potential for a recovery higher is now developing. If this is triggered, the commodity could be seeing a bullish build up in the days ahead towards the 1,663.70 level. A break and hold above here will call for a run at the 1,702.31 level, its Aug 25'2011 low where a reversal of roles as resistance is likely to occur and turn the commodity back lower. Further out, resistance comes in at 1,754.40 level, its Sept 23'2011 high ahead of the 1,816.50 level, its Sept 21'2011 high. Alternatively, a return below its Sept 26'2011 low at 1,532.90 will trigger further weakness towards the 1,500.00 level and then the 1,478.05 level, its July 2011 low. On the whole, though Gold is vulnerable on corrective weakness, the presence of a hammer suggests a loss of downside momentum and the possibility of a recovery could be developing.

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