The most important number for COMEX gold is $1,540 an ounce. This was the support level tested in October 2011 and in May 2012. It acted as a resistance level in June 2011.
This is the lower level of a long-term sideways trading band that has been in place since October 2011. This trading band developed after the peak high of gold near $1,924 in September 2010.
The upper edge of the trading band is the strong resistance level near $1,800. This resistance region was tested in November 2011 and in March 2012 and again in October 2012.
The reality is that gold has been trapped in the sideways trading band since November 2011. The trading band includes strong rallies and strong retreats. This offers good short term trading opportunities.
In May 2012 the gold price moved below the long term uptrend line. The long term uptrend started in February 2011. Once the price moved below the long term uptrend line it rebounded from support near $1,540. The value of the long term uptrend line acted as a resistance level in October 2012. The value of the trend line was near to the upper edge of the trading band near $1,800.
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The width of the trading band is $260. This value is used to calculate the potential downside and upside targets if gold price develops a breakout. A move below the support level near $1,540 has a downside target near $1,280. This calculated target is above the historical support level near $1,260. This suggests that any fall below $1,540 has the potential to fall to support near $1,260.