Gold markets rose during the Monday session as the hammer from the previous session triggered off buy orders. The gold markets have been oversold recently, and the trading community is expecting another good year in 2012. Because of this, there is a real chance that many traders were stepping into the market on Monday in order to get ahead of the move as other traders come back.
The real test for the bulls is going to be in the $1,650 level, as there is a shooting star from last week that started the fall. The breaking of that candle’s top would be a very positive accomplishment for buyers in this market. Overall, the market has massive support below the area we are at currently, and the area should continue to be a launching point for buyers going forward. The market is in an uptrend over the last several years, and as a result – we feel the buying of gold is the only direction we can go in right now.
We are very constructive at this point in time, and think that the upcoming issues in Europe will make the European Central Bank print Euros, and the Federal Reserve could very well find itself having to expand its balance sheet in the form of quantitative easing. Both of these actions will put a bid in under the gold markets going forward for the better part of this year.
A break of the top of Mondays highs would have us long, and a short isn’t even on the radar at the moment. A breaking below the $1,500 level would certainly have us questioning the ability to sell though, as the giving of that mark would certainly signal something is changing in the attitude towards gold. However, we feel that a breakdown is becoming less and less likely as the larger trading desks come back from vacation this week. The gold story still presents us with plenty of reasons to be bullish, and as long as the $1,500 level holds up, we feel that dips are simply buying opportunities.
Gold Forecast January 3, 2012, Technical Analysis
Originally posted here
