Gold markets broke down for most of the week, but Friday was very bullish. We reached towards the $1220 level, an area that offered a lot of supply. The market looks likely to roll over a bit here, but longer-term charts show that there is a lot of support underneath. This is especially true near the $1200 level, and the weekly candle that we are forming is a hammer. Pullbacks at this point should be buying opportunities, and I think that the value hunters are starting to come back in into this market.
If we can break above the $1225 level, we then should continue to go higher. I believe that the market will continue to be very noisy, but I also believe that the closer we get to the $1200 level, the more likely we are to have plenty of value hunters. I think that the market breaking below the $1200 level would be very destructive, and it would break down the gold market overall. I don’t think that the market is good to be easy to deal with, so keep that in mind. I’d be somewhat quick to take profits if I have a lot of leverage on, but physical traders may be looking to pick up value all along this core door of trading that we have seen.
