Gold would move higher in dollar terms


Gold is finding good support between $1,515 and $1,520 and strong resistance on approach of $1,530. We believe that gold will continue to push higher in 2011. We maintain our core
long view on gold.

While we believe gold would move higher in dollar terms, we expect gold denominated in euros to outperform. On the back of the debt crisis in Europe, our G10 FX analyst last week updated the outlook on the euro/dollar exchange rate. We now believe that we have probably seen the peak of the euro/dollar, and that any rebound from here won’t see euro/dollar above 1.50. As a result, rallies in euro/dollar should be sold, as we focus in on the longer-term target of 1.20 in the next 12 months.

Gold support is at $1,515 and $1,512. Resistance is at $1,528 and $1,538.

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