Gold pulled back in the European session today, dropping $1.50 between the AM and PM Fixes in London to $653.75 per ounce.
"People are happy to trade gold from the long side," reckons David Holmes, analyst at Dresdner Kleinwort Investment Bank.
"But they are cautious as they want to know whether we are going to be able to break through resistance."
"They are looking for the [US] energy data this afternoon [with heating oil numbers due at 15:30 GMT] because that could have an influence on the oil price...That could be a catalyst for gold to make a break on the upside."
A pullback in Sterling has boosted the gold price for British investors however. It's now trading at £332.50 per ounce.
And any further pullbacks in the Dollar price should encourage fresh buying elsewhere according to a new report from UBS Investment Bank.
"We believe that fundamental commodity investors are very positive for gold's prospects this year," it says, "although their positions are smaller than they would like and they are hoping for an opportunity to buy gold on dips."
UBS today upgraded its gold-price forecasts from $650 to $700 per ounce by May. And it's not just Western investors looking to build their positions in gold.
Escorts Mutual Fund in Mumbai has asked for permission from India's Securities and Exchange Board to launch an exchange-traded gold fund (ETF) similar to the Benchmark fund due later this month and the Kotak Gold fund due in March.
Escort's open-ended scheme will list on the National Stock Exchange, with a minimum investment of Rs 5,000 – approx. $113 at today's exchange rate. The scheme also wishes to charge 1% on entry, with an exit fee of 0.5%.
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