Gold is trading within an upward sloping price channel, but the entire upward move from 1,304 is not impulsive. There are many overlapping price movements in this channel and the most possible scenario is that this upward move is just a correction. Strong resistance is found at 1,345 and 1,360. The support at 1,320 is important as it was tested yestreday and prices did not break below it.

The above chart shows the short-term uptrend, but we feel it is a fragile uptrend. The breaking below 1,320 will test 1,300 and then 1,270. Bulls will need to stay above 1,320 and then try and break above this channel and test the last high at 1,375.

Currently, we are cautiously bullish as long as prices trade above 1,320. This price level could be used as a stop reverse, as it is important support. On the other hand, long positions should be held as long as support holds and traders should add to longs if prices break above 1,345 and 1,360. Confirmation will come with the break above 1,375 that will push prices towards 1,400.