By FX Empire.com
Gold markets fell during the session on Thursday as the $1,750 level continues to be resistive. The market has seen consolidation lately, and the candle shape for the session being a shooting star suggests that perhaps more consolidation is to come. The level is a major one, but the recent strength in the gold market suggests that it could be overcome sooner or later.
The call for higher precious metals prices should continue as the central banks will keep an easy stance for quite some time. The European Central Bank, Federal Reserve, Bank of England, and of course the Bank of Japan are all pushing liquidity into the markets. The interest rates are low, and the threat of more “printing” by the central banks will continue to make traders want to hold hard assets. The gold market is chief amongst them when it comes to this kind of trade, and as such we like buying – even if the recent action hasn’t been so impressive.
The $1,700 level continues to be our mark for support, and as long as we stay above that level we are still comfortable with buying the dips on a short-term chart, and will continue to do so. If we can break above the $1,750 resistance level on a daily close, we are willing to add to those positions as it would clear the way for a move to the $1,800 level.
The shooting star on Thursday should provide a drop that could very well give us an opportunity to buy the metal cheaply. The gold market still looks primed to continue the longer-term uptrend, and we think the $1,900 level will be tested again this year. In fact, we are willing to buy every time we clear another “$50 level” such as $1,750, $1,800, $1,850, etc. as the market is so technically attracted to the levels.
The market cannot be sold until we clear several supportive levels below, and the real “line in the sand” that we see is the $1,500 level – which of course is much lower than here. The market will continue to be a “buy only” one for us until that happens.
Gold Forecast February 10, 2012, Technical Analysis
Originally posted here
