Gold Price Forecast – Gold markets break out to the upsideGold markets rallied significantly during the trading session on Tuesday, as the US dollar lost a bit of its luster. Ultimately, there is support below at the $1185 level, an area that has been supportive more than once.
Gold markets continue to be very noisy, moving basically upon the US dollar and its movement. I think at this point, it’s likely that we continue to see buyers on these dips, and I think that the $1185 level should continue to be important. If we can break above the $1195 level, then that should open the door to the $1200 level next. In general, I believe that the market participants will probably infer that level, and it would essentially form a “W pattern”, which of course is a very bullish sign and a reversal signal. However, I think that the $1210 level above will be resistance, so I think we are simply going back and forth in the longer-term consolidation area.
Looking at this market, I can see that there is a lot of noise, but if you use the EUR/USD pair as a proxy for the US Dollar Index, you can get an idea as to where gold should go, as it does tend to move roughly the same as the EUR/USD pair. Dollar strength is bad for this market, but it also on the opposite trade can work as well. Looking at these charts, I like the idea of buying dips going forward, and I believe that eventually we should continue to go back and forth longer-term, but we are at the bottom of the overall range, so that of course represents an area where gold is “cheap.” I like the idea of going long at these low levels, but if we were to break down below the $1185 level, I think we could unwind another $10.