Gold extended its rally above $1200/oz yesterday after rumors hit that China's SAFE is reconsidering its exposure to EU assets. The possibility of a different asset composure at SAFE benefits gold and the dollar with few other options available. However, Chinese government officials were quick to deny this rumor today, helping the risk trade gain back some lost ground. Meanwhile, focus remains on the EU as investors wait for a vote from Spain's parliament on planned austerity measures. If the measures don't pass this could put the Euro under pressure and boost gold. However, if the package passes this could give a little vote of confidence to the EU, though it will be interesting to see how gold would react in this situation. Gold seems to be at a crossroads at the moment with previous all-time highs hanging overhead and the psychological $1200/oz level waiting below. Hence, a bit of consolidation over the near-term would not be surprising. On the other hand, we've come to expect the unexpected from the EU over the past couple months, meaning investors should keep an active watch on the markets.

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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