The gold markets rose again during the session on Wednesday as the sentiment for gold seems to be getter better and better. The $1,650 level has given way, and we think the grind higher could continue at this point in time. The area was a tough fight, and because of that, it looks like the move upwards is starting to be taken seriously.

The level being overtaken is a stark contrast to the selloff that the market went through towards to end of last year. The market has come back, and the bounce has shown that the long-term sentiment is still upwards for the gold markets. The $1,700 level should be the next level the market tries to reach. With the Tuesday candle forming a hammer, we also favor the upside now that the $1,650 level looks to be supportive now.

The European Union continues to struggle with debt crises and various issues of insolvency and this should have people shunning fiat currencies while favoring hard assets. The demand for gold is also seen as fairly strong amongst the central banks of the world, and as a result there will be massive buy orders overall. This is one of the biggest drivers of the gold markets presently.

Until the credit issues are solved, the demand for gold should only rise as central banks continue with easing. The values of various currencies around the world are set to plunge, and this will make things and stuff more valuable than paper.

Looking at the charts, the $1,650 level should be support now that we have not only broke and closed above it, but also that we have a nice large hammer from Tuesday. The $1,700 level will be resistive, but we believe it to be a minor level and the market should be able to grind through it.

While we may not see $50 a day gains going forward, this market does look healthy overall. The demand for gold remains, and this is true for most commodities. As the central banks continue to tinker with monetary policy, gold will thrive. We are buying at this point, and will continue to do so on pullbacks.

Gold

Gold Forecast January 19, 2012, Technical Analysis

Gold Pivot Points (Time Frame: 1 Day)

 Name  S1  S2  S3  Pivot  R1  R2  R3

 Classic
1647.4000
1633.0500
1623.4000
1657.0500
1671.4000
1681.0500
1695.4000

 Fibonacci
1647.8820
1642.2180
1633.0500
1657.0500
1666.2180
1671.8820
1681.0500

 Camarilla
1659.5500
1657.3500
1655.1500
1657.0500
1663.9500
1666.1500
1668.3500

 Woodie's
1649.7500
1634.2250
-
1658.2250
1673.7500
1682.2250
-

 DeMark's
1676.2250
-
-
-
1652.2250
-
-