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Last week was mixed for gold. A move out of gold ETFs weighed on the yellow metal prices. Then the market posted its strongest one day performance in a month on Friday. It was driven by declining US home sales data helped restore some confidence amongst investors that the Fed will continue to pursue very accommodative momentary policy.
Gold has registered losses over two of the past three months. However, while the market is still beneath the opening levels from the beginning of March, the bull trend in gold since February 2010 has not been tested in 2012. Dips continue to attract investors.
In addition, the market ended the week above the 50% correction of the rally that has dominated 2012 from 1529 in late December to 10792 at the end of February. As a market trends higher it is not unusual to have a 50% correction on a rally before making a renewed advance.
Looking forward, a break above last week’s high at 1668.8 would attract follow through buying for a retest of the March high at 1718. The danger level in terms of the base building is Thursday’s low at 1629, since a break beneath here would undermine the base and target 1600 and 1560 gold price.