Gold Forecast December 28, 2011, Technical Analysis

Gold markets continued to slump on Tuesday as the economic situation pushes people towards the Dollar in general. The stock markets did rise slightly for the session, but the optimism was tempered by the fact that the volume was very light. The Dollar strength is starting to weigh heavily on this market, and the end of the year meant that a lot of traders wanted to book end of year profits to help with their statement sheets.

The world economy is certainly slowing in many areas, and this suggests that the gold markets could see a hit for a little while. However, the market isn’t one to sell for anything more than a scalp or short-term trade. The uptrend has been far too strong over the last ten years, and this pullback has simply been a blip on the chart if you look at the totality of the rally. None the less, this market does have investors running.

Most analysts believe that gold will get a bid in 2012 as the European Union will almost undoubtedly print more Euros, and the Federal Reserve is very likely to think about Quantitative Easing 3 if the problems in Europe have too great of an effect on the US economy. These moves would almost certainly have people running back into the gold trade, and the move up from there could actually accelerate as the market runs from both the Dollar and the Euro at the same time.

Technically speaking, the $1,500 level should be massive support if we fall that far. The $1,500 to $1,600 area is one big massive support area, hence us not being overly enthusiastic to sell this market. In fact, we are presently flat in it as selling has been such a good way to lose money since the turn of the century. The market will be a screaming buy in the future, but we simply don’t see the price action telling us that we could be there yet. Stay tuned to our videos as these signs do appear, and in this market that could means months of profits.