Gold has made an impressive rally since the end of July and climbed to 1168.16 on Friday, its highest since July 7. It is now hovering around the 61.8% Fibonacci retracement level of the rise from 681.43 (October 2008) to 1920.80 (September 2011). Prices are now testing this level at 1155.44.
If prices move off this level and bounce higher to clear resistance at 1168.16 and past the 200-day moving average, the next target is 1200.00. This is an important barrier which if crossed, will strengthen the upside momentum. A shift back to the downside would target the July 20 low of 1071.19. The stochastic and the RSI both approached overbought levels which could suggest some consolidation in the near term.
In the bigger picture, the market is still considered to be bearish, as long as prices remain below the key 1200 level and below the 200-day moving average.
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