Consolidation is the current pattern for spot gold, having climbed for the past few days, breaking through resistance earlier in the week.
Quantitative easing is being talked about more, with concerns that a faltering economic recovery may not achieve its intended results. A weakening USD$ supports the increase in the gold price.
Resistance is pegged at $1,235 and $1,244, while support stands at $1,218 and $1,209, its 10-day moving average.
"We expect the broader market to calm down also with a relatively thin macro calendar this week," broker VTB Capital said. "Gold prices are likely to consolidate near new highs, given that there are no surprises on the broader market."
Gold also remains a favourite with longer-term investors - billionaire investor John Paulson continued to raise his exposure to gold miners during the second quarter. He has increased his holdings of major producer Gold Fields by $6.7 million or 500,000 shares.
"The combination of a weaker USD and very low US bond yields makes investing in precious metals attractive due to low opportunity costs," Credit Suisse said. "Gold and platinum in particular can achieve further gains in the coming days."
"Gold ETF investments are on the rise with passing of each month in every nation," consultancy Insignia said. "Gold is now behaving like a speculative instrument as well as a currency. This will result in the gold price rising to $1,500 by end June 2011 and $1,900 by end 2012."
The global gold market has been transformed over the past decade. Jewellery, for decades the backbone of gold consumption, has moved to the sidelines amid voracious demand from investors. Central banks, for years big sellers of bullion, have performed a radical U-turn and started to buy.
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