Gold has been displaying bullish price action in the last couple of week. This one has been particularly strong. And there is no surprise about that. It fell dramatically in July. However, all of the losses have already been erased in these last two weeks.
It is pretty logical that gold is taking a breather now as some long positions are being closed. We should expect some retracement, but as bullish inertia is quite strong we have a lot of support below starting with 1150, followed by 1136 and finally 1126. I do expect the last level to hold, not so sure about the first two.
Expectations of rate hikes from US FED are slowly receding and having found support gold may continue rising. In the meantime I expect some consolidation and possibly choppy price action in the commodity.
Strong resistance is seen around 1190 and 1200 levels, followed by 1205 and key one 1230 (18th of May high). Profit taking in gold long position may continue into the beginning of next week: Monday to Wednesday, but buying pressure should come around the middle of the week.
Key economic data today: Bank Canada Consumer Price Index at 12:30 GMT and USD Markit Manufacturing PMI at 13:45 GMT