Gold Prices January 27, 2015, Technical Analysis

Gold markets initially tried to rally during the course of the session on Monday, but the $1300 level offered a bit too much in the way of resistance, and we turned back around during the day. Ultimately, we believe that there is support below, probably closer to the $1250 level, and we believe that buyers will reenter this marketplace. The impulsive move that we have seen recently is indicative of a market that has broken out of a downtrend in our opinion.

When you look at the gold charts, we should see quite a bit of support below based upon not only the round number mentioned above, but the fact that it was so choppy on the way back up. Also, you have to keep in mind that although the US dollar is very strong at the moment, the truth of the matter is that there is a certain amount of concern when it comes to Fiat currencies in general, and that of course will drive up the value of gold as it is considered to be a “hard asset.”

This is a necessarily the anti-dollar play that it can be at times, this is more or less in reaction to concerns with the Euro, and the fact that silver banks around the world continue to attempt to devalue their currencies. It was not only the European Central Bank that did it last week with expanded quantitative easing, the Canadians also had an interest-rate cut which of course shows that perhaps Canada is weakening as well. In other words, a lot of gold buying is probably coming from places like Europe as people are simply trying to protect their wealth from the wild fluctuations that we’ve seen in the Forex markets.

Ultimately, we feel that this market will break out to the upside but a little bit of a pullback is going to be healthy for the uptrend as it needs to collect more buyers at lower prices and we look at that move as potential value. We will treat it as such, and purchase more.