Gold may trade above $1,100 this week. A move to $1,140 or even higher is quite possible based on short-term short covering.

There have been heavy volumes of buying and selling between $1,084 and $1,130 over the last two weeks, reflecting a battle between shorter term investors liquidating positions based on a stronger dollar and economic indicators and longer term investors taking price dips as opportunities to buy.

Roughly half of the short-term shorts have rolled out of their April positions, taking advantage of the lower prices. Even so, a significant amount of open interest remains to be rolled this week.

Combined exchange traded fund gold holdings were 56.67 million ounces as of 25 March, up 290,031 ounces from 56.38 million ounces on 19 March.

A weaker dollar this week could provide added support for gold prices. Confidence in currencies has been lacking as investors have continued to be interested in gold. Prices remain vulnerable to further selling, however, and could decline back toward $1,080.

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