Technical trading and currency fluctuations will likely take over in terms of short term gold price direction

Gold had a consolidation day on Wednesday, trading sideways before closing just below $1,310/oz. The ongoing debt problems in Europe have undoubtedly been one of the driving factors behind gold's ascent over recent months, however, renewed concerns over Ireland and other Eurozone countries like Spain appear to be having less of an influence on prices. Moody’s downgrade of Spain to Aa1 from its top level of Aaa today was well flagged and had little lasting impact.

Gold has instead looked to the dollar for direction during the morning, climbing on the back of further dollar weakness. Expectations of further QE, plus what looks likely to be an extended period of low interest rates will see gold continue to remain well supported. Now that the metal has broken through the $1,300 level, technical trading and currency fluctuations will likely take over in terms of short term price direction.

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