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The gold markets initially fell for the week only to turn around and bounce higher. As we are closing out this week late Friday, the market is knocking on the door of $1700. This level looks like it's about to give way, and as such we think continuation is more than likely. The candle that formed for the week is a hammer, and this could be a very bullish sign if we can get above the $1700 level.
There is a long up trending line that has been in effect for several years that has been proven to hold yet again. It honestly looks like there is absolutely nothing stopping this market from reaching $1900 again. The $1800 level will of course be resistance, but it does look like we've consolidated enough that we could see a real acceleration and the uptrend now. As for selling this market, we would have to break through the $1500 level now, something it seems like a long and distant memory.
With central banks looking to ease further, there really is no point in trying to short gold. The Federal Reserve Chairman Ben Bernanke suggested on Friday that the Federal Reserve could very easily start purchasing US treasuries again, and this of course have the markets thinking of further quantitative easing. Because of this, we saw a massive spike during the Friday session.
With this being said, it does look like we could get a little bit of a pullback, and if we do we would only look at it as an opportunity to buy gold at a cheaper price. The Federal Reserve looks like it's ready to ease, and the ECB almost has to - and we should not forget that the Bank of Japan is aggressively doing so already - so this should continue to put a floor in the precious metals sector in general. Gold will undoubtedly reach the highs again, and possibly even much higher. In fact, we expect to see a $2000 print sometime within the next 6 to 9 months.