Medium Term Update: Gold has reversed sharply since high 1558

Gold fell off a cliff after the FED announced the end of QE2 and after the release of oil supply. There is a lack of bullish support from Gold after making it to a high of 1558.

Looking at the overall picture seasonally, Gold is looking to bottom out by tomorrow which is Tuesday. Interesting points to note is that there is options expiry today along with a voting on greece's bailout plan. If the vote goes in favour of the bailout package then there should be about $10-$15 rally in Gold. This date coincides with a bottom forming seasonal date. Ofcourse it can be the other way but we favour the upside case looking at the seasonal.

Technical picture also points to us that a recovery is definitely underway and downsides should be limited if any. A break above 1505 would lead gold into the resistance series at 1515-1525. So what to expect? Not necessary to trade here unless for a small day trade near resistance. Apart from this, we need to wait and watch what the Greece situation is like and also the Rating Agency's take on Italy. There are strong rumours that Fitch will downgrade Italy and this has being weighing on the Euro (positive for dollar).