Increase in physical buying as gold dips towards $1,550

Gold fared pretty well during the early part of last week. However, as US trading commenced, another bout of euro weakness (and the consequent dollar strength) took prices lower, erasing the gains of the earlier sessions. The selling eased off around the $1,550 mark, which is proving to be a significant support level during the past few weeks. This point of support we feel has much to do with the increase in physical buying we’ve observed over the past few days as gold dips towards $1,550. While Indian demand has been lower than normal, overall, we continue to see decent buying interest from the rest of Asia, especially South East Asia. Our Standard Bank Gold Physical Flow Index (GPFI) remains
positive and has recently pushed significantly higher as buying interest returned.

Gold support is at $1,550 and $1,537. Resistance is $1,578 and $1,592.

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