"This theory that $1,050 represents a 'floor' is now being put to the test."
There is a popular point of view that the Reserve Bank of India put a 'floor' under the gold market around $1,050, which approximates the price at which it bought 200 tons of gold from the IMF. The thinking is that other central banks, and perhaps the Reserve Bank of India itself, will purchase gold at that price. This theory that $1,050 represents a 'floor' is now being put to the test.
Regardless whether this theory proves accurate or not, it is clear from the following chart that gold remains firmly within a major uptrend. Gold also remains above its all-important 200-day moving average.
This long-term price chart of gold is providing us with an important message. The panic selling seen today has hardly put a dent in the bullish picture presented by this chart.