Gold is quiet perky this morning after breaking above its March highs just below the $1145 level. Reuters is chalking up the rally to risk aversion but it doesn’t feel like that too me.
My guess is central banks are less comfortable diversifying reserves into EUR as the Greek situation remains unsettled and are increasing exposure to gold as a reserve asset, a very traditional role for the metal.
The next level to watch for gold is $1156, the 61.8% retracement of the $1225/1045 decline. We trade now at $1147.