The demand for the gold has increased in the beginning of this week to open on a gap at 1423$ after closing last week at 1418$ underpinned by the beginning of the military operations in Libya to cap EL Qaddafi forces and the aviation in Libya which has been answered back by opening his weapons stores to the people in Tripoli announcing the Mediterranean sea as a region of military operations opening the gate for any immigrations to Europe without any intersection which can extend the period of instability in Libya and tackle the land military operations against him but it looks that France and from the first moments of this action insisting in hitting him sand his land military facilities strongly as a reply of his words about funding the election campaign of Sarkozy and France asking for aids from Libya.

The gold has started to rebound from 1380$ last week after the intervention to weakening the Japanese yen which has been passed by an agreement from the G7 for restoring the lost confidence in the markets which has been hit by the Japanese earthquake and its implications which caused increasing of the nuclear radiations scales in Japan triggering selling asking for liquidities and specially for the Japanese yen which is well-used as a funding currency as its very low interest rate for lowering the investments costs and this action could brought back the hope for using it again as a funding currency as the direction is now for devaluating it after reaching these recent worrying rates which do not tackle the Japanese exports only but also the investments spending sentiment in the assets and stocks markets broadly. So it was a must to do for encouraging the markets confidence again while the criticism from the European countries are expected to be at the minimal level while the Japanese exports are depressed from different sides with the yen recording its all times high versus the greenback and the Japanese products are exposed to the radiations tests all over the world.

The gold is now trading around 1430$ after making a bottom at 1380$ which has been reached under increased technical pressure coming from breaking the trend line support extended from 1307$ to 1412$ at 1428$ and it is still well exposed to forming a lower high as long as it is still below its all times high which has made at 1444$ down below this supporting broken line while breaking 1444$ and getting back above this line can increase the buying momentum to test the next psychological waited level at 1500$

Kind Regards

FX Market Strategist

Walid Salah El Din

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