The gold markets fell again on Tuesday as the risk rally faded in other markets. The US dollar saw a little bit of a bid and this will often weigh on the price of gold in this market. The Yen fell, so gold rose in terms of Yen - a sign that it isn't gold that is weak; it is the Dollar that is gaining. However, in times like these, gold will often pop unexpectedly as a safety play.
Considering how everything risk related fell on Tuesday, the fall in the gold pits wasn't much to think about to be honest. The market still looks to be supported at the $1,700 level, and it is at this level we expect support to step back into the markets as the overall trend is still up. The market has been running fairly strong until the last week or so, and this pullback should offer plenty of rest for the next leg up.
The central banks around the world are getting ready to increase easy monetary policy and currency printing, and this almost always favors gold in the end. Because of this, we are still bullish of the gold markets, even though it looks like a rest is needed. We like the idea of buying in other currencies more than the Dollar, if you have the ability to do so.
The $1,750 level still looks to be resistive, and we expect a fight at that point if we rise back to that level. The supportive action at $1,700 could be very strong, as most support areas have produced large green candles in this market. The market recently broke a downtrend line that signaled the next leg up. It appears at this time that we are simply winding up for that momentum to pick up.
We are currently buying dips in this market, and looking to hold positions for the long-term as well. As long as we are above the $1,500 level - we don't sell gold at all and prefer to buy on pullbacks that show signs of support.
Gold Forecast February 15, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3