Gold futures hit a two week low as the US dollar soared on euro zone debt fears and gold slipped below 1560$ on MCX intinally some support seen on rupee weakness which had closed with a fall of -0.32% at 53.60 and on MCX gold slipped by -1.36% to settled at 27281. Light New Years holiday volume added to the volatility as traders relaxed in preparation for 2012. Italy's Treasury short term bond auction was a bright spot but the optimism faded quickly as concern over long term auction results escalated. Adding to the dollar positive and commodity negative sentiment, the use of the ECB's overnight deposit facility reached an all time high of EUR452.03b. This increased fears that the ECB's crisis lending programs are not sufficient to lift the banking sector out of it malaise. For much of the last year, investor's typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unraveled recently. Instead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the US dollar. Now technically market is trading in the range as RSI for 18days is currently indicating 35.1, where as 50DMA is at 28611 and gold is trading below the same and getting support at 27047 and below could see a test of 26814 level, And resistance is now likely to be seen at 27617, a move above could see prices testing 27954.

Trading Ideas:

Gold trading range is 26814-27954.

Gold dipped as investors avoid new positions before the new year amid lingering concerns over the euro zone’s debt crisis.

Precious metals extend losses to two-week lows on book-squaring and euro zone worries

Gold has been pressured with its safe haven appeal waning as investors prefer the dollar as their safe haven.