Gold continued its rise on Thursday as traders pile back into the one trade that has been extraordinarily reliable over the last eleven years. The gold markets have been very bullish in that time period, with the exception of a couple of large pullbacks, but the continued devaluation of currencies will make sure that this market continues to go to the upside for the foreseeable future.
With the Federal Reserve extending its ultra-low interest rate policy until at least the end of 2014, gold will continue to rise against the Dollar. Also, the European Central Bank is about to add liquidity, another way of saying print money, gold will rise against Euros as well. The Bank of Japan is going to start flooding the market with Yen for the year, and this will push up the price of gold in Yen as well.
The uncertainty in Europe will continue to have traders buying gold for a measure of safety in an unsafe time. The market continues to focus on the European issues, and as long as it does - we should see more and more waves of buying in this market. The market will also be bid up as long as there are concerns in the Middle East as well. All in all - the traders continue to buy gold.
The breaking of the $1,750 level shows just how strong this market is. The level served as resistance, and has now been cleared and ready to act as support. The $1,800 level seems to be the next target. In fact, we believe that the market is going to make a run to retest the highs in the $1,900 area. With this in mind, we cannot sell gold at all - and in any circumstance.
The gold markets will be one we return to time and time again to buy. We like buying dips going forward, and expect that the $1,750 level should be supportive on the pullback. The market isn't even close to being low enough for us to sell it, which would be at $1,500 at the very least before that could be considered.
Gold Forecast February 3, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3