The spot gold price is 1% higher today at $1363 an ounce. (ENspreads).
Prices fell sharply yesterday in the wake of the FOMC announcement on further quantitative easing measures.
However according to Barclays Capital fundamental physical gold demand helped prop up prices.
This morning investors have moved back into gold sending prices back to the top of recent ranges.
Further gains could be in store should the gold price stay above the pivot level of 1354.
Trading Central have advised 1365 and 1375 are in sight.
"Our FX analysts note QE is consistent with further orderly broad dollar depreciation in the short run, which bodes well for gold but longer-term concerns over inflation amid an environment of low interest rates continues to create a gold positive environment within which we believe prices are set to test new highs in," says Suki Cooper at Barclays Capital.
On the physical demand side Cooper says total holdings remain close to alltime highs, reflecting the stable interest of longer-term investor interest. In terms of physical demand, Reuters has cited several Indian gold wholesalers and retailers reporting a sharp increase in sales ahead of the Diwali festival.
Beyond the seasonally strong period for gold demand, prices may find they have a softer cushion on the downside.
