Gold reversed course after dipping below $1200/oz amid profit taking. The risk trade made an about face after fear spread that Hungary could become the next Greece. Additionally, U.S. employment data missed analyst estimates, giving investors multiple reasons to divest from risk. Considering last week's risk rally lacked fundamental and psychological backing, it's safe to say that gold's medium-term uptrend is still intact despite last week's setback. Meanwhile, the data wire will be relatively quiet until Thursday's flurry of data and central bank meetings. Hence, psychological forces should drive the market over the next few trading sessions. Should conditions in Hungary worsen, concern about the exposure of EU banks to Eastern Europe could elevate risk aversion and push gold back above June highs. On the other hand, gold still seems range bound and will need a game changing move in either direction to break free. Technically speaking, gold faces technical barriers in the form of 6/1 and 5/14 highs. Additionally, the psychological $1250/oz level should serve as a solid technical barrier should it be reached. As for the downside, gold has multiple uptrend lines serving as technical cushions along with 6/4 and 5/25 lows. Furthermore, the psychological $1200/oz should continue to serve as a solid technical support over the near-term.
Present Price: $1217.45/ oz
Resistances: $1219.16/oz, $1221.69/oz, $1225.20/oz, $1227.63/oz, $1229.56/oz, $1232.22/oz
Supports: $1215.42/oz, $1212.52/oz, $1210.36/oz, $1208.18/oz, $1205.26/oz, $1202.26/oz
Psychological: $1200/oz, $1250/oz
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