Gold Forecast Dec. 21, 2011, Fundamental Analysis

Gold prices inclined on Tuesday, after the dollar depreciated following yesterday’s gains and data out from both German and US economies, where Germany’s IFO business climate inclined above expectations, in addition, the U.S housing starts and building permits knocked out analysts’ median estimates.

Furthermore, Spain sold short-term bills with lower yields, which accordingly boosted risk appetite among traders for higher-yielding assets, including the Euro, British Pound and stocks.

As the year nears to end, lights are about to fade upon the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.

Accordingly, we should expect more fluctuations for gold, but should the current pessimism persist, we should expect gold prices to extend the rallies, yet so far, the level of uncertainty is t the upside, so investors are ought to remain cautious for the time being.