Spot gold gained 0.4% to $1698.57 an ounce on Thursday.

That represents a 7% decline from the levels seen three months ago. At current prices gold appears to be attracting some attention, as signs the eurozone sovereign debt crisis is spreading to Germany, Europe’s biggest economy, narrows investors’ choice of safe-haven assets; on Wednesday Germany drew the weakest demand for its bonds since the introduction of the euro, signalling the country’s sovereign bonds are no longer perceived as safe. This should be positive for gold, although the precious metal could continue to encounter selling pressure by institutional investors seeking to raise liquidity in difficult periods, so tread carefully.
 
On the weekly charts gold hasn’t been able to close above the 20-day moving average, while on the daily charts gold is struggling to close above the 50-day moving average. Also, the standard Moving Average Convergence Divergence indicator (MACD) is appearing somewhat bearish. All else being equal, the technical indicators suggest that it is possible for gold to fall further and perhaps test the 200-moving average of $1630 an ounce.