Gold looks set to advance anew from here. It has been in corrective mode for a week now following its approximately $15 run-up earlier in the month. This measured reaction of the past week has allowed the developing overbought condition to ease and the moving averages to swing into more bullish alignment. The action of the past week has also synchronized with a weak pullback rally by the dollar towards the neckline of the Head-and-Shoulders formation that has developed over the past 10 weeks or so. It is thus considered likely that gold will advance in coming weeks to test the December highs in the $456 area.

There is plenty of support for gold between the current price and the $430 area, especially with the rising moving averages not far beneath. This was evidenced by the positive action Friday when, although the price dipped back into support, it closed near the day's high - thus downside is regarded as limited here.