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The projected move from the pattern suggests that we could go looking to reach the $2020 handle.
The gold markets rallied during the trading session on Monday to reach the $2000 area. This obviously has a certain amount of technical and psychological importance, but the fact that we have sliced through that area so easily in the past does suggest that we should be able to do so again. The short-term pullback that we have seen since then should be a buying opportunity, with the $1970 level being an area that previously had been resistant. “Market memory” suggests that we are going to have plenty of buyers in that vicinity.
It is worth noting that the previous action has been trading between the $1920 level and the $1970 level. The projected move from the pattern suggests that we could go looking to reach the $2020 handle. The market continues to see a lot of noisy behavior, but I do think that it is only a matter of time before we get a bit of follow-through in a continuation of the overall uptrend. If we break above the $2000 level, then I think the buying pressure will continue to be very aggressive. Ultimately, I like the idea of buying dips in this market and do not have any interest in selling gold until we break through the $1900 level.
As we are so far away from that level, then I think it is likely that we would need to see some type of major shift in the overall global risk and the overall outlook for the markets. I think that as long as we continue to see a lot of uncertainty out there, gold should continue to see plenty of buyers. Keep in mind that there are a lot of concerns about inflation out there and of course fiat currency destruction. Gold is a bit of a hedge for all of that and simply put, the market has been in a strong uptrend for quite some time, there is no reason to think that is going to change anytime soon. I like the idea of taking advantage of value as it occurs, and I will be waiting to see whether or not that offers itself, and therefore I might look at the shorter-term charts in order to get long going forward. At this point, I look at the $1970 level should offer support underneath.
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