Gold prices may move between $1,180 and $1,230 this week, although there still is potential for gold to head toward $1,250. Prices moved back above $1,200 last week as investment demand surged.

Prices below this level drew buying interest. Combined exchange traded fund gold holdings were a record 62.85 million ounces as of 27 May, up 1.64 million ounces from the end of the previous week.

This was the largest weekly increase since February 2009. Gold prices also were aided by the contract roll in the New York market.

While investor concerns over European sovereign debt problems remain, the level of anxiety seems to have eased, which could allow for prices to ease a bit this week.

As gold prices test resistance levels the degree of buying eases and profit-taking weighs on prices. The reduced volatility in financial markets in recent days has translated into less volatile gold price activity.

Gold may begin to show signs of consolidation, but another wave of financial market instability could push prices sharply higher. A surge in political tensions also may provide a strong impetus for increased investment demand.

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