Gold markets rose again on Thursday as traders continue to sell not only the Dollar, but a lot of other paper assets as well. This will always give a boost to the gold markets as it is considered as a hard currency for such situations. With the ongoing crisis in Europe, there will continue to be a lack of confidence in paper currencies in the European area, and with the Federal Reserve promising ultra low interest rates for the next two years, the trading world will continue to be a bit hesitant to buy the Dollar as well. Because of this, gold will continue to get a boost.
The breaking of the $1,700 level was significant, and the fact it was done on the fly as the market simply popped right thought shows just how interested traders are in owning gold. When everyone wants it - it is easy to make money in that market. It is obvious that the price of gold will continue to rise over time; however it isn't always easy to get a decent entry. By paying attention to a few areas on the chart, you should be able to enter with a reasonable stop and size to your trade.
The first area that looks interesting to us for buying gold is the $1,700 area. After all, the area was never fully tested as it just shot through it. Markets love to go back and revisit levels, so this wouldn't be a surprise to me on some kind of pullback. The $1,650 area would also be of interest, but we feel that the area probably won't be retested yet again as the $1,700 round number is still waiting.
We are ready to enter on supportive candles at those areas, and if the market continues to run to the upside - we would be forced to buy at the break of the top of Thursday's range. Either way, there is absolutely no way that we can be bothered to sell this market as it is far too strong lately, showing real demand.
Gold Forecast January 27, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3