Gold is consolidating above its highly psychological $1200/oz level as investors debate whether to retest previous May highs. Consolidation above $1200/oz is certainly a positive development, though it will be interesting to see whether the precious metal can manage to break out again or whether it deviates back below $1200/oz. Overall, the risk trade is in a consolidation phase and it appears investors are deciding where to take the next leg. Considerable downward pressure remains due to the fiscal headwinds blowing form the EU. Meanwhile, we’ve got some important data coming this week along with and RBA decision tomorrow, meaning activity could pick up as the trading week progresses. China will get the ball rolling tomorrow with manufacturing PMI. Fasten your seatbelts because we could be in for another volatile week.

Technically speaking, gold faces technical barriers in the form of intraday and 5/18 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 5/25 and 5/21 lows. Furthermore, the psychological $1200/oz area now becomes a technical cushion.

Present Price: $1210.78/ oz

Resistances: $1215.69/oz, $1219.16/oz, $1222/oz, $1226.80/oz, $1229.56/oz

Supports: $1210.58/oz, $1207.21/oz, $1202.59/oz, $1199.91/oz, $1197.08/oz.

Psychological: $1200/oz, $1250/oz

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