Gold drifted lower in Asia today despite a rise in gold futures traded in Tokyo.
After Friday's sudden leap above $627, gold stood $2 lower per ounce as the European session drew near.
"There are some investors taking profits after Friday's big gain," said a Japanese gold analyst to Bloomberg.
"But trade will be thin because of a market holiday in the United States." (Wall Street is closed today for Martin Luther King Day.)
The Sterling price of gold dipped below £320. Versus the Euro, gold pulled back €1 from its 7-week high above €485 per ounce.
Gold continues to look very strong against the Euro on a technical basis. Last Thursday it broke the downtrend starting Nov.10 as interest-rate news caused mayhem in the currency markets.
The Bank of England raised Sterling rates to 5.25% but the ECB kept Eurozone rates at 3.5%. The Euro tumbled to a 29-month low versus the Pound below £0.66.
The ECB also said it would not use "strong vigilance" in tackling inflation. So with Eurozone money supply rising 9.3% year-on-year – and more Euro notes in circulation than US Dollars – French and German investors may be glad to hold a little gold today.
Technical analysts also say the Dollar price of gold looks set to rise further.
Analysts at Scotia Mocatta report that "gold easily broke through [its] 200-day moving average trading [on Friday] as high as 627.75...On the downside expect buying from the 200-day moving average down to 615.00 as the old resistance level now provides support."
"For now as long as gold stays above the $610-$611 area," says Investec Australia in its daily report, "we expect prices to keep testing the top of the band around $628, with a target of $636 should it break."
"We saw some improvement in demand last week at lower levels from physical buyers. This proved particularly significant in holding prices above the psychologically important $600 level, despite a large easing in oil prices."
But what of the fundamentals supporting the current bull market in gold? For a full report by Ned Schmidt of the Value View Gold Report, click here and read on...