The gold markets fell for the week as the Wednesday session saw a massive plunge in the market of over $90. The Federal Reserve Chairman failed to mention more quantitative easing during a congressional meeting, and the Bank of England also suggested that perhaps their quantitative easing may be just about over as well. Adding to the situation was the fact that the European Central Bank gave no hint as to whether there would be another LTRO going forward and all of the sudden you had weak longs getting out of the market as the inflation concerns will have subsided as a result.
Of course, there wasn't any implicit denial of the possibility of QE3 out of the Chairman, but to be honest, it appears that the US economy is improving, and the real risks are to the upside at the moment. This isn't true in many other countries, so there is still going to be demand for gold going forward as a result.
Looking at the weekly chart, you can see the trend line that the market broke above has been retested this past week. It has held as support and because of this - we are more interesting in buying now. The shorter term charts can be used for entries at this point, as it allows the trader to fine tune their entry into an obviously bullish market.
The $1,700 level holding as support has been very important, and we feel that even if it does give way - there are many areas below that the market buyers may use as well to buy gold on the cheap. The trend has been up for over 10 years, so to think it is going to suddenly fall is probably a bit delusional.
With this being said, we are only buying gold and not selling it. The $1,800 level being cleared to the upside would have us holding on for a move to the $2,000 level at this point. If the market closed on a daily chart above that mark - I would be long at that point.
Gold Forecast for the Week of March 5, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3