Gold markets first fell on Wednesday, but bounced later in the session to form a second hammer in a row for the day as the $1,700 level continues to push prices higher in this bullish market. The buying of gold has been the only way to go for over ten years now, save a few pullbacks here and there. With this in mind, we have been calling for support at $1,700 and it looks like that has been confirmed again.
The crisis in Europe is taking all of the headlines, and many traders are buying gold back up in order to protect wealth. The rise of the Dollar has been slightly troublesome for the gold markets from time to time, but in general – they both have been going up over time. The recent low is higher than the one before it, so we are fairly confident in our bullishness in the short-term as well as the long-term. The concerns over fiat currencies should continue, and with the debt situation in the United States not being too much better than Europe for the long run, we feel there will always be at least some underlying demand for gold.
The past two days have both shown that traders are willing to step in and buy when the markets fall, and this is our thesis going forward. The buying of dips is the way to go, and the massive support level from $1,600 to $1,700 can be thought of as a floor now. The recent high at $1,800 is our first target, and we are willing to step in and buy on short-term dips, or even at this point presently. With the crisis going the way it is, there is far more risk of bad headlines our there than good ones, and either should propel the gold market upward as it not only serves as a safe haven, but also as a risk asset simultaneously. The recent action has been strong, and we think that going into the new year this trend should continue for quite some time.
Gold Forecast Dec. 8th, 2011, Technical Analysis
Originally posted here
