Gold price rose supported by physical demand. Gold rose as much as 1% on Monday to a high level of 6 weeks, driven by technical buying and as the euro rallied ahead of the meeting of the European zone on Greek debt restructuring. Gold has penetrated into the upper level of $ 1.669 per ounce which is a key resistance level, and approaching the level of $ 1.700 per ounce for the first time this month.
Physical demand, particularly from Japanese investors, managed to sustain the performance of gold at the beginning of the week. Gold is heading the other technical areas. Closing level above $ 1.675 means there will be buying action this week ahead of the expiration of option contracts and while waiting for news from the zones of Europe.
At present too many factors driving gold, investors will be hard to focus on one factor alone. This will make the gold moves ranging. If the situation in the euro-zone back worse then gold can sell as a natural re-strengthening of the dollar. However, increased geopolitical risks, including the Persian Gulf situation, will increase the attractiveness of gold as a safe-haven assets.
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