Gold attracts strong bids early in Asia

Gold is trading $18 higher early in Asian trading to $3366. It rose as high as $3370 to briefly top the Asian peak from yesterday in a sign of solid demand.

Earlier this week, gold hit a record high above $3500 but that led to a powerful round of profit taking into Wednesday’s trading in the US. That’s since stabilized and the US dollar was soft again earlier in US trade. Now we’re seeing fresh signs of Asian demand.

Some levels

The first line to watch is whether gold can hold above yesterday’s Asian high of $3367 and then I will be eyeing the 50% retracement level at $3380, followed by the all-important $61.8% level at $3409. That would be a big hill to climb before the weekly close and imply a further $42 rally from here.

If that were to happen, it would be a powerful dip-buying signal and sign of a strong appetite from real money gold buyers.

This article was written by Adam Button at www.forexlive.com.