Gold markets rose for the week as investors piled back into the markets. The week even saw the shooting star from the previous week violated – always a massively bullish sign. The week closed towards the top of the range, which is also very bullish as well. Because of this, it appears that the gold markets are ready to start moving upwards again.
The last 11 years have seen massive bullishness in this market, and this year is probably going to be no different. The $1,650 level has been supportive lately, and we feel that all the way down to $1,550 could be support as well. The market looks very healthy at this point in general as the volumes have been good as well. Judging by the way January has gone so far, it appears the selling in December was exactly what we suspected: End of the year squaring of positions.
With the central banks buying gold in large amounts over the last couple of years and continuing to do so, there will be a natural bid underneath this market for some time. Also, the EU will more than likely start printing Euros and there is even talk of the Fed starting another round of quantitative easing in the near future too. Both of those events would be bullish for precious metals in general.
The breaking of the weekly candle to the upside gets us long in this market, and we see the $1,700 level as the first real test. However, if you look at the gold markets, there seems to be resistance and support every $50 or so. This pattern will continue, and this market will be very technical in nature. The areas will more than likely fall one by one, but we could see pullbacks near them. However, they will be great places to buy more gold as we break above them and confirm support in the future. Selling isn’t an option, and it hasn’t really been one for over 10 year now. We like buying gold on a move higher, and would even consider buying the dips as well – as long as we stay above the $1,650 level.