LONDON (Commodity Online): US gold futures fell to $1722 per ounce last week to a six week low but has climbed on Monday to $1725 in electronic trading. Barclays Research remains firmly bullish on gold.

Gold prices sliped on profit taking amid stronger dollar and reduction in risk appetite with equity markets also weakening, Barclays said.

Speculative positions have fallen to a four-week low and although physically backed ETP holdings have eased from record highs, overall metal held in trust remains close to its recently attained peak.

“ Physical demand in India has softened as the local price has risen in turn providing reduced buffer. Market focus this week will shift to the FOMC meeting, which we do not expect to negatively impact gold. Given our FX view for the USD to weaken against the EUR over the remainder of 2012, coupled with the physical market’s recent responsiveness to lower prices, we retain a positive outlook for prices. “

Price forecast: Q4 12: $1810/oz; 2012 annual average: $1691/oz

“While our greater view for gold remains firmly bullish, near-term downside pressure offers potential to enter long positions at better levels. We would look to fade weakness against the confluence of support in the 1615/1665 area and look for a move back toward the range highs near 1800. A break above the latter would confirm our bullish view for a move toward and ultimately through the record highs near 1921 over the end of the year and into 2013, “ Barclays said.
-Resistance: 1757, 1775
-Support: 1700, 1728