Spot gold was in bearish tone since few days as many indicators suggested for a dip towards 50% retracement level which lies at around 665 levels. Crude oil as well rebounded from it 50% retracement and USD Strength continuing, the interest in gold was falling.

Gold hold well at its key support lies at $665 level, if we see any break down at that level, it could slip back to $655 which is the congestion support area.

However, the correction looks over and the pressure to upwards shall resume, forming a good buying flow in the market. With Gold Futures trading choppy on tuesday, helped by a lower-than-expected rise in consumer prices in April and rebound in crude oil. Gold also recieved a boost from recovered copper prices and mixed bag of economic indicators with expectations for a future U.S. interest rate cut that might weaken the dollar.

We feel its a good buying opportunity at $665 zone which should give good profit returns in medium term with continued recovery, the market will be successfully clearing the 23.6 retracement level at $680.60.

Its good to enter at $665 and close the trade at 23.6 retracement level and next profit book at $693.40. If we fail to hold $665, we could short sell at $663 and book profit at $655 with next profit looking at $640.

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