By FX Empire.com
Gold markets fell on Friday as traders will have undoubtedly taken a bit of profit following the massive move over the course of the week. The market managed to break above the all-important $1,750 level a few sessions ago, and as it did – there was a bit of a surge to reach just under the $1,800 handle. The pullback will more than likely be temporary as the central banks around the world are net buyers of gold at this point in time.
The central banks are also going into easing mode as far as all of the major powers are concerned. Because of this, the demand for real and hard assets will continue to climb as the value of fiat currencies continues to crumble. The demand for gold is still strong in Asia, and as the Chinese government now allows its citizens to own gold, there should be continued demand from that country for years to come.
The $1,800 level above is resistive, but it is a minor area and should give way eventually. The level is essentially the only thing standing between the market right now and the all-time highs in the neighborhood of $1,900. Because of all of the points listed above, we are buyers of gold, and view these pullbacks as the metal going on sale more than anything else. The market simply cannot be sold as the market is prone to sudden spikes, and this could be very dangerous for traders.
The $1,750 level below should now act as support, and we will be very interested in buying near that level if the price action shows signs of that support coming into the market. A break below that should set up support at $1,700 to come into play. The market isn’t able to be sold until we reach a sub-$1,500 daily close as the trend has been so strong over the last ten years or so. Because of this, we buy dips and hold onto our positions for the meantime as the long-term bull trend should continue into the foreseeable future.
Gold Forecast February 27, 2012, Technical Analysis
Originally posted here
