Chinese traders returned to the market last Friday. Gold is around 1% higher than where it was when the holidays started, still demand has been upon China's return. China's gold consumption jumped 41% in the year 2013. Traders eye today's Fed chairwoman first semi-annual monetary policy report. Her words will give a hint whether the disappointed job report data make any changes in the Fed decision.

Gold started its upward journey after making a higher low in the last day of the year 2013. In this new year 2014 till now we completed 28 trading days. From them, only 10 trading days were red and 18 trading days were green. We can clearly see the bull hug in the daily chart. On the weekly basis, currently we are in the 6th week. Only one week was red and the rest 5 weeks were green. This is caused by lower level buying and below $1,200 is an uneconomical level.

In the weekly and daily charts gold has broken and is trading above the descending upper trend line, which is a bull factor. If we go through the chart, we observe gold completed its pull back at the level of $1,279 (38.2% retracement level) from August 2013 fall. Gold attempted 2 times to cross that level. Yesterday again it tried to cross the level. After the disappointing US job data USD cooled a bit. Friday, the US stock market rebounded, so gold stepped back. Monday, the Dow Jones closed just in green, gold rallied towards its crucial level. RSI looks still positive in the daily and weekly charts. Whereas in the hourly charts RSI does not look favorable for longs.

Alert- If gold trades and sustains above the level of $1,279, next targets may be at $1,294, $1,300, and $1,307. Support exists at $1,253 and $1,242.

Intraday- Buy above $1,280, targets are $1,289 and $1,291.