Gold markets continue to grind sideways as the $1,700 level holds as support. The market is going to continue to get a boost from the central bank around the world printing currency and easing monetary policy. However, the Dollar surge from time to time will come into the market and push prices down occasionally.
The $1,750 level above should continue to be resistance, but in the overall picture is a minor area. The level should give way once the market picks back up and the trend continues. The selling of gold isn't something we are willing to do until the $1,500 level gives way on a daily close - something that is a long way from happening at the moment.
We like buying dips, and also would buy on a break of the top of the daily range for the Thursday market. The $1,750 level is known as a resistance point, so the more short-term oriented trader may want to consider taking some profit at that point if not completely closing out. However, if history repeats itself - this market will go much higher than that level before it is all said and done.
The $1,800 level above that is a more serious area, but the momentum in the market has been fairly strong, and the market has been higher than that in the not too distant past. The $1,900 level should continue to be resistive as well, but the fundamentals for gold are still very strong, and the central banks are net buyers of the market as well. With this in mind, the only direction that a trader can be in this environment is long as fighting the central banks are a huge mistake.
If the $1,700 level does give way, this would be a signal to be patient and wait for some kind of support. The market is very technical, and the $50 intervals seem to be the way to go. The $1,650 and $1,600 levels are the two biggest in the near vicinity and will be watched for buying opportunities as well. We only buy - never sell gold.
Gold Forecast February 17, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3