Gold had a strong rally last week, making its way to the psychological 1900-dollar mark. The precious metal also managed to close fractionally above it, which may support a further upside scenario. This morning, the commodity did exactly that, it made its way further north and overcame the previous all-time high, at 1921, and hit a new high, near the 1944 hurdle. Overall, gold is still trading comfortably above a medium-term tentative upside support line drawn from the low of March 19th. Given the steep upmove, there is a chance to see a small correction first, before another move higher, especially if the price struggles to move straight away above its newly-established high, at 1944. Overall, we will stay positive, at least for now.
If gold struggles to move above its new all-time high, at 1944, it may retrace back down a bit. However, if the price continues to hang above the 1921 zone, which is the highest point of 2011, that may keep the buyers interested. The precious metal might get another boost, which may lift it back to the 1944 area, a break of which would place the commodity in the uncharted territory. The yellow metal might set sail towards the psychological 2000 mark.
Alternatively, if the price suddenly falls all the way back below the psychological 1900 zone, that may temporarily spook the buyers from the arena and allow the sellers to dictate the rules for a while. Gold might then drift to the 1881 obstacle, a break of which could clear the path to the 1844 level. That level marks the high of July 21st. This move could still be seen as a corrective one, especially if the price continues to get supported by the aforementioned upside line.
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