While the bulls must have been slightly disappointed on gold's failure to attain a weekly close above key 302 dollars/oz, the upward trend is still very much intact. Japanese investors continue to show interest in gold, and unless something dramatic props out of Bush-Koizumi meeting early this week, the present trend is likely to continue. Having said that, the Japanese investors may switch to profit taking if the Yen depreciates to 138 Yen/dollars levels and at the same time they may become nervous stop loss sellers if Yen appreciates beyond 129 yen per dollars. While Japanese gold buying is not the main factor driving the gold price1 it is nevertheless an important event that gives a loud warning about the state of Japanese economy and its potential downside risks with global implications. While we remain positive on gold, further consolidation may be on the cards towards early 290s dollars/oz, however we expect strong buying to emerge around those levels with subsequent test of 307 dollars/oz and 313 dollars/oz on the upside.
NSTL
