Gold continued to rally on Monday as investors attempted to hedge themselves against the fallout of the growing MENA tensions

Gold continued to rally on Monday as investors attempted to hedge themselves against the fallout of the growing MENA tensions. In Asian overnight trade, the start of the week saw an extension of precious metal gains, although trading volumes were relatively low.

Markets have shrugged off talk of social unrest in China, after Premier Wen pledged to root out corruption and ensure a more equitable distribution of the gains of economic expansion. Even comments that the annual economic growth target would be lowered to 7% failed to discourage investors in Chinese equities. However, this should be a negative for the commodities complex,
although more so for the base metals.

For today, headlines in the MENA region should continue to influence investor participation in precious metal markets. However, US income and spending data, if particularly encouraging might dampen investor interest. The US consumption expenditure deflator will also be watched closely for emerging signs of inflation. A sharp increase might prompt further interest in precious
metals from an inflation-hedge perspective.

Gold support is at $1,403 and $1,395. Resistance is at $1,416 and $1,420.

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