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Gold Forecast December 6, 2012, Technical Analysis

By:
Christopher Lewis
Updated: Aug 21, 2015, 00:00 UTC

The gold markets fell rather precipitously during the Wednesday session as the shooting star from the Tuesday trading session got broken to the downside.

Gold Forecast December 6, 2012, Technical Analysis

The gold markets fell rather precipitously during the Wednesday session as the shooting star from the Tuesday trading session got broken to the downside. We are now underneath the $1700 level, and as a result we think we could test the $1680 support level as well. On this chart, you can see that there is a 200 day moving average strong as well, and we believe as long as we are above this area, most of the longer-term traders will still be involved to the upside.

The month of December typically sees a selloff in the gold markets anyways, as large funds will collect their profits for the year. After all, they are not technically able to “book profits” until they actually close out their positions. Their very wealthy clients will insist on seeing returns at the end of the year, and as a result quite often these funds will close out the winning trades that have worked the most during the year as it provides a bit of a buffer for any trades that are currently underwater.

Typically, the month of January sees a pickup in buying in the gold market, and depending on what your time frame is you may want to take advantage of this season as a possibility of buying gold on sale. Look at it this way, if you are willing to hold physical gold or the GLD ETF, you can ride out the volatility and step in front of the market before gold prices rise during 2013.

There is also the possibility of the United States going off of the fiscal cliff. If this happens, you will see a selloff that all risk related assets. However, at the end of the day this should prove to be a buying opportunity for gold and other precious metals. With that being said, we are still very bullish of the gold market, even though we do not have a futures position on right now. We have close down futures positions that did not work out, but still hold the ETF and physical gold as a core holding that we have had in play for several months now. With this in mind, we are simply looking for some type of supportive candle in order to start buying again. 

Gold Forecast December 6, 2012, Technical Analysis
Gold Forecast December 6, 2012, Technical Analysis

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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