FxWirePro: Maintain bullish outlook for gold

After the rumor hit the market that the European Central Bank (ECB) might go for a tapering after its bond-buying program concludes in April, Gold suffered a very big loss yesterday, probably the biggest single day loss in some years. However, it won’t be fair to just blame the rumor for gold’s big drop; the yellow metal was struggling to find the next level of momentum and once the $1300 level got broken big long covering and  selling pressure set in.      

We had expected that $1300 area would hold and we forecasted that the gold would reach as high as $1525 area. We still stand by that target and expect the yellow metal to turn bullish in the medium to long term. However, there are likely to be selling pressure in the short run. Gold is likely to find sellers at a bounce back around 1.129 area and slide towards the key support around $1190-1200 area.

We expect the above support to hold and the gold to turn bullish after visiting $1230 around.