After soft economic data, gold rebounded from the lower levels of $1,312. Gold recovered during the European trading session. The US dollar weekened after the Federal Reserve Bank of NY said that the general business conditions index came in at 4.48 for the current month vs 12.51 in January. Gold is moving against all the forecasts, now everyone is talking of the bull run. We expect the trend to change in the short term. The ongoing tapering of the QE makes the US dollar stronger, which is a major bearish factor for gold.

In the hourly chart yesterday gold held the 40DEMA. The price continuously tested the support at the level of $1,312.3 for three hours, it succeeded and flew back again. Yesterday, we recommended selling, all our targets were met. RSI is still in the overbought zone in the hourly and daily charts. The price created a base around the levels of $1312-$1,310. Major weakness only closing below these levels. Now the price movement framed in a tight range of $1,310-$1,332.

Support: $1,319, $1,316, $1,310.

Resistance: $1,325, $1,332 $1,338.

Today gold closed below $1,318. The short-term trend will change, sell further if it closes below $1,310 for the targets $1,300, $1,290, and $1,285.