Gold Price Outlook – Gold Continues to See Support

Gold Technical Analysis

The gold market has rallied just a touch during the early hours on Wednesday as we continue to threaten the $4,400 level but have not yet been able to break above there. At this point in time, it is probably only a matter of time before that happens, and it opens up the possibility of the next obvious psychological number, the $4,500 level.

Short-term pullbacks at this point in time end up being buying opportunities, with the $4,200 level underneath acting as a floor. The uptrend line from the channel that we have been in and the 50-day EMA both come into the picture to offer potential support as well. Even if we were to break down below $4,200, this would not suggest a major breakdown quite yet.

Central Bank Demand and Liquidity Support

Keep in mind that central banks around the world will continue to buy gold, as it is a buffer against a lot of monetary policy from other central banks and concerns about global growth. There are also concerns about the US dollar, and that adds more pressure as well.

A lot of this comes down to central bank liquidity and national liquidity as debts continue to mount. When countries find themselves neck deep in debt from a national perspective, dollars are great, but gold is even better, especially in places like Spain or Argentina, or anywhere else that does not naturally produce the US dollar. With that being said, the dollar and gold can and probably will rise from here.

At this point, it is the end of the year, so there may be a little wobble here and there, but a trend change is not expected. Keep in mind that Thursday brings both the Bank of England and the European Central Bank, and Friday brings the Bank of Japan. There is news coming out that could make this market volatile, but trend-changing is probably unlikely.

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