Gold Market Update : Gold Hit High Of $1262

Gold hit a high of $1262 overnight, touching the upper boundary of the down trend channel on the daily chart and finding resistance there as would be expected.

The price has drifted back to $1254 this morning in quiet trading due to the Martin Luther King holiday in the US, with equities flat, oil down a little and the dollar holding the key 81 level.

The environment remains challenging for gold, with the strong dollar capping the recent gold rally and the continued rally in equities drawing investment funds away from gold and commodities. The weak oil price signals a subdued inflationary environment and, with rising interest rates, gold is bound to find the going tough.

We suspect gold has made a high for this rally at $1262 and we anticipate a retest of $1$180 in the next few weeks.

Support can be found at $1250-$1255, $1237-$1240, $1220-$1225, $1218, $1214, $12$10, $1200, $1190, $1188 and $1180. A break of $1$180 would have serious bearish implications for gold and suggest a decline to $1000-$1050 in the short term.

Resistance can be found at $1268-$1270, $1277-$1280 and $1291-$1295. A break above $1268 would suggest an end to the short term down trend, though it would take a break of $1300 to suggest a more significant rally was developing.