Gold markets sold off on Thursday as various factors came into play. With another round of selling in the equity markets, many traders found that they had to cover the losses in other markets. Also, the Euro fell hard, and this boosted the Dollar, with of course can sometimes hurt the gold markets as they are priced in those Dollars.
The breakdown didn’t manage to get below $1,700 – which was the start of the massive support area that we said must hold. Because of this, we are still bullish of this market in the long-term. However, the EU summit is presently going on, and any disappointment could be very dangerous for markets in general. It is because of this that we feel this might be a good time to give the market a few days to settle down before buying again. We don’t sell gold, it has been in an uptrend for over ten years, and has obvious support all the way down to $1,600 below.
The “buy on the pullback” strategy has been the one we have used most often in this market, and we feel that it should continue to be used – but presently we need to see a bit more supportive action as the daily chart is closing near the bottom of the range for the day. With this in mind, it makes sense to simply step away from this market and let the panic settle before we try to buy it again. In the long run, it should still be going up as all the fundamentals point towards serious concerns with fiat currencies, and we think that longer-term investors should definitely be holding gold as well. But part of trading is the timing, and the time to buy this market isn’t quite right.
Good news out of the EU summit may actually cause this market to skyrocket as the Dollar would get sold off. Because of this, we think that could be the catalyst, but again – the trend is so strong we are willing to forego a day of trading for confirmation.
Gold Forecast Dec. 9th, 2011, Technical Analysis
Originally posted here
