Now that’s what I call a bounce. What an amazing week its been on the gold market. May 19th we wrote about how a possible Bull Hammer candlestick had developed in both the gold and silver markets. The following days saw gold put in not one but two further dips below the $1535 mark before rallying intra-day back above $1560. It looked like a bottom was definitely being carved out and with RSI dipping below the 30 mark (indicating an oversold position), a trigger was all that was needed to propel the gold price back to where it wants to be.

Seems that trigger came, Friday, in the form of a much-weaker-than-expected U.S. jobs report that quickly put thoughts of U.S. quantitative easing monetary policies back on the table. Spot gold rapidly traded up $60 for the day to close above $1620.

In other news, the US Dollar continues to gain from European fallout over Greece’s impending exit from the Euro. Over the course of May 2012, the USD Index has climbed 4 points from just under 79 to over 83. This index compares the dollar in a basket against six other fiat currencies most notably the Euro.

All other things being equal, a strengthening Dollar means the price of gold increases in all other currencies since we have to pay more of them to get the same number of dollars in which gold is priced.

According to technical analyst Jim Wyckoff, the gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the May high of $1,674.30 and the bears’ next near-term downside price objective is closing prices below what is now psychological support at $1,600.00.

First resistance is seen at $1,640.00 and then at $1,650.00. First support is seen at the April low of $1,616.30 and then at $1,600.00.