Gold markets rose slightly on a light volume day during the Monday session as Americans celebrated the Martin Luther King holiday. The markets got a little bit of help by a one-notch downgrade of several European countries and the EFSF bonds on Friday and over the weekend. With this in mind, a lot of traders are looking for some kind of safety trade away from fiat currencies, including the Dollar.
However, the $1,650 level is very resistive, and we think that this area will put up a good fight. However, the market should have more traction as the volumes pick up after the holidays and the fact that so much is going on in the EU right now. Because of this, we are buyers, but need to see a daily close above the above mentioned resistance level before buying. Buying on the dip is also possible, but we would prefer to see supportive candles closer to the $1,550 level in order to do so.
Gold Forecast January 17, 2012, Technical Analysis