The gold markets rose on Tuesday as traders got wind of a supposed Greek debt deal in the works. At the end of the day however, nothing had been announced - except that the Greek lawmakers had postponed a meeting to discuss the workout. The gold markets rose as the Dollar sold off, and managed to pop above the $1,750 level at one point during the session.
The central banks are also buyers of gold, and this has put a serious bid in the market. Because of this, the dips have all proved to be buying opportunities over the last several years, and the fall we saw on Monday was yet another example. However, the $1,750 level just above is resistance, and we need to see the market close above it on the daily chart to think that we are free of the constraints of this present consolidation area.
The $1,750 level has seen many attacks on it, and the most recent visit was back in early December when the market failed and plunged to the post-holiday lows in January. Because of the action back then, this area should continue to offer a fight, but with the last eleven years being so bullish, it is hard to go against the bulls in this market. Because of this, we are buy only in this market.
The world is currently watching several central banks cutting rates, printing money, and being dovish in general. With this in mind, the value of gold should rise as the fiat currencies are weakened in value simultaneously. The trend should continue for the long-term, and we are looking for a $1,900 print by the summer time this year.
The candle does look very strong from the Tuesday session, and does suggest that there will be more buying pressure, but until that level gets closed above, it is hard to buy at the moment. Pullbacks would also be welcome - that exact advice worked on Tuesday. The $1,700 level looks to be supportive going forward, and each time we fall at this point in time, we are willing to go long on shorter time frames in small positions to build up a large one over time.
Gold Forecast February 8, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3