Gold markets got a boost on Tuesday as the Americans came back and bought the metal hand over fist. Perhaps this was a reaction to the good news coming out of Europe regarding the Greeks, or perhaps it was a reaction to the fact that there seems to be a lot of easing in the future by several central banks. None the less, the market had a very strong session on Tuesday, and looks set to finally continue the bullish run from the start of the year.
The $1,700 level has held firm as support, and as a result we have been talking about buying the dips on lower time frames. This strategy has served us well, and we are currently watching the recent highs just above in order to buy even more. The close of the session looks very convincing, and it does suggest that perhaps that breakout is coming soon. The demand for gold has many things working for it presently, and there is no sign of that changing.
The $1,750-ish level has been one that has kept prices down. The close for the session was just a little bit above that level, but slightly under the recent highs form a couple of weeks ago. With this in mind, we like to see the other highs broken before adding to our position. The closing at the top of the range from Tuesday does bode well for the market, but prudent traders will wait for confirmation as the headlines have been causing most markets to behave in a very erratic behavior lately.
The $1,800 level should offer a bit of resistance in the future, although we have been higher than that mark. This normally means that it will eventually get broken, and we fully expect it to. The $2,000 level is calling, and we believe the market is listening. The pullbacks at this point aren't selling opportunities - they are simply chances to get gold at a discount. In order to take full advantage of this market, this is how we shall look at the situation. We see absolutely no scenario for selling at this time.
Gold Forecast February 22, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3