Gold is back in a holding pattern and awaiting the outcome of the Federal Reserve policy meeting. The gold market will be scrutinizing reports for any signs of further monetary easing which would give the green light for the market to move higher again and possibly back towards record highs at $1,920.
Gold is presently trading towards the top end of a $1,760/$1,812 range and held in check partly by a bout of dollar firmness which can attributed less to positive prospects in the USA, than to arguably a worse economic outlook for Europe.
Arguments against higher gold prices include a chart pattern which suggests gold is in a "double top" coupled with a reduction in net speculator longs on COMEX as futures traders take profit - a trend which should see the market retrace from current levels. On the other hand, beyond technicals gold is seeing good seasonal buying in Asia as well as mounting Eurozone debt concerns — especially vis a vis Italy at this time.
In short, there are strong arguments to support whatever view you are predisposed towards.
To support a gold price over $2,000 we would expect there to be a partial break-up of the Eurozone in the form of the departure of Greece. Whether or not gold then rallies to $2,500 would depend upon whether the EU has managed this process itself in an orderly fashion, or whether their hand had been forced by the markets and they are running behind the news, as it were.
Austin Kiddle is an analyst at the London-based gold broker Sharps Pixley Ltd.