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LONDON (Commodity Online): Physical gold market has shown signs of life but the yellow metal’s ability to breach $1800 market continues to rest with developments in Europe, US macro data and whether central banks ratchet up QE asset purchases, according to Barclays Capital in a research note.

According to the British bank, physically backed gold ETP interest has continued to grow in October, taking total metal held in trust to fresh record highs. Gold holdings have now hit 2567 tonnes with inflows of 23 tonnes in the first week of October alone. Inflows for the year-to-date have reached 192 tonnes, surpassing full-year inflows for last year at 175 tonnes.

Speculative positions in Comex gold rose for the seventh straight week to its highest level since August last year. The CFTC data for the week ended 2 October cover trading activity ahead of the ECB press conference and US non-farm payrolls data. Non-commercial positions rose by 4.4k lots as the establishment of fresh longs (5.4k los) offset fresh shorts (1k lots).

Gross long positions are at their highest since September last year and net longs now make up 43% of open interest but remains below the peak of 51% implying further room to grow.

“Our bullish view for gold is encouraged by the continual push higher. Ideally we would like to see a break above the range highs near $1803 to confirm further upside toward the record highs near $1921,” Barclays added.

Gold priced in EUR is correcting back from recent record highs near 1836. This is seen as a healthy development as it allows stretched daily studies to unwind. We would use dips as an opportunity to enter longs and expect to find nearby buying interest in the 1350 area. The 12-month average near 1294 has provided a reliable indicator of trend on a monthly closing basis since 2009.

Price forecast: Q4 12: $1810/oz; 2012 annual average: $1691/oz

-Resistance: 1796, 1803
-Support: 1763, 1750

Global gold prices are trading not far from unchanged but presently favoring the upside in early trading on Tuesday.

Some profit taking and chart consolidation are featured. A firmer US dollar index is somewhat limiting buying interest in gold and silver early this week.

The gold market bulls are still in firm near-term technical control as prices hover just below their recent seven-month high.

December gold last traded up $1.80 at $1,777.40 an ounce on the Comex division of the New York Mercantile Exchange. Spot gold was last quoted steady at $1,776.00.  December Comex silver last traded up $0.043 at $34.06 an ounce.