The bounce back in gold late last week has not formed a trend yet. A study of the daily chart shows that only a decisive break above $1290, the 50% retracing of the 20 December to 17 March uptrend, will reverse the downtrend started in mid-March. The level is also endorsed by the 50-day moving average.
The yellow metal has mild resistance at $1265, the 61.8% retracing and $1277 ahead of the $1290 mark. The next higher side level will be $1314.
However, MACD below zero continues to show weakness of the metal and on a move lower back again, first support will be at $1240 and then it comes at $1230. More important levels on the lower side seem to be $1220 and $1187.
The mild drop in gold on Friday was related to the dollar moves after the US jobs report. Dollar moved lower initially after the lower-than-expected non-farm payrolls, but as the focus shifted to the overall trend of steady job growth later, the greenback recovered pushing down the metal.
With no major economic data prints from the US or the eurozone this week, equity markets and risk are likely to play a major role in guiding the US dollar. Stimulus measures by the European Central Bank have already boosted risk sentiment.
If safe-haven liquidation continues owing to the persisting risk on scenario, then that will keep the yellow metal under pressure.