Gold forecast for the week of December 31, 2012, Technical Analysis

The gold markets did very little over the last week as we would have expected it to. After all, Christmas was on Tuesday, and Christmas Even of course was on Monday. Because of this, the week would have been very thing, and on top of that this is a traditionally quiet time of the year for the market anyway. After all, gold has been such a large gainer for most traders out there over the year that many of them would have sold off their position in order to realize gains earlier this month.

With all this being said, we see this is a significant support level that could produce a buying opportunity going forward. We think that January will see more money flow into the gold markets, and as a result we are waiting for a supportive candle in this general vicinity or a break of this week’s range to the upside in order to start buying. As far as selling is concerned, we have no interest in selling gold as we not only own physical gold, but also own the ETF known as GLD. This ETF is basically a low leveraged way to play the gold futures market, and is one of the most illiquid instruments out there. Because of this, we are essentially always long of the gold markets, and shorting it just makes no sense.

We use the gold futures market as a way to make our profits more explosive in times that the market looks like it’s ready to continue higher. While futures markets are not necessarily our core position the fact that we have the ability to hold the other physicians means that we are always in the market and always able to capitalize on gains even if they’re not expected. Going forward, we fully expect to go long sometime in the month of January, and as a result could also simply go long sometime during the first week of January as well. The gold markets have had an 11 year bullish move, and there is nothing out there to suggest that central banks are going to stop printing currency which of course drives up the value of gold in the long run.