Nearby Gold Monthly Technical Analysis for January 2016

Nearby Comex Gold futures closed lower in December after posting a narrow range. The range began tightening up on December 4, a day after the European Central Bank announced a stimulus package that was not very impressive to investors.

Gold managed to hold the low put in earlier in the month at $1045.40 after the Fed raised interest rates on December 16. Expectations of additional rate hikes and the stronger U.S. Dollar held prices in check the entire year and the market posted its third consecutive annual loss in 2015.

Based on the end-of-the-year close at $1060.20, the direction of the market in January is likely to be determined by trader reaction to the long-term uptrending angle at $1087.80. A sustained move under this angle will eventually lead to a test of the next long-term uptrending angle at $913.80 in January. This is the last potential support angle before the $739.80 main bottom.

Looking at the short-term chart, a sustained move over the angle at $1087.80 will indicate the presence of buyers. This move may create enough upside momentum to challenge the nearest downtrending angle at $1124.50. This angle is the trigger point for an acceleration to the upside with the next target a downtrending angle at $1188.30.

A sustained move under $1087.80 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside. If the market follows the downtrending angle throughout the year then look for a test of about $945.00 by December 2016.

Watch the price action and read the order flow at $1087.80 this month. Trader reaction to this angle will tell us whether the bulls or the bears are in control. The catalyst behind the movement this year will be the U.S. Dollar once again. The Fed is widely expected to raise rates again in June. This should help the dollar and pressure gold prices. The speed at which the Fed hikes rate this year will determine how fast the gold market moves lower.