During May 2006 Gold saw a high of $ 732. The same way people were expecting the metal to touch those levels during this year also. However, It could not penetrate the Psychological barrier of $ 700. Now looking at the way it has taken a steep fall from 700 levels to 654 the crucial previous break out level, it appears that the earlier band of 666-696 has moved to 654-674. The crucial level 652 is expected to hold, on breach of that level we may see 642. The break will also result in break of long term trend line at 652. and there could be a wave of selling due to stop triggers. One possibility is that it reverses from here to touch 683 again. In which case the bet is buy at 652 with a stop of & $ 3.wherein the risk reward ratio is higher.
The fact that USD is showing good strength after a long fall might see the gold test lower levels.
With no other major risk perceptions in the market Gold may move in a narrow range of 652-683. Any levels below 652 it is preferred to wait for test of 641 and then 636 to build-up fresh positions.
Technically it is likely to test 641 before a bounce back. This week will decide the direction.
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