18 February 2013 at 7:56 GMT
In last week's absence of a downside cushion from the Chinese market,due to Chinese New Year . combined with technical selling, gold prices breached1600 on Firday to print a low of 1597 - a levels not seen in six months. Buying out of India has also softened, as prices stabilised earlier; thus, this price correction should spur interest next week. Should physical demand fail to respond, the floor for prices is set to become increasingly fragile and a test of the critical 1580 level would seem imminent . Alot of option interest sited there too. Break below 1570 would be adverse to the longer term bullish trennd, and stops from long term longs are sited below. Silver heldremarkably well only dropping 65 cents where we would usually have seen a much more agressive sell off with such a large drop in Gold. ( 5 % in 7 days).
Some consolidation /range trading expected this week with 1625 offer first reistance and 1600 should attract atleast some Asian buying.