Gold markets have been building a bit of a base for a while now, as we formed a massive hammer a couple of weeks ago, and now have formed another hammer to back that up. Currently, I am waiting to see whether or not gold can take out the $1820 level, because if it can I think this market can really start to take off. In the meantime, I think if you keep a smaller position you can ready yourself for the move after the new year. Keep in mind that liquidity will be a major issue between now and nonfarm payroll, so do not get overly aggressive in any position you choose.
I believe at this point, we could very well see a move towards the $1875 level, once we break through that little bit of resistance that I was talking about. The gold market of course is highly influenced by the US dollar, so pay attention what is going on over there is well. The gold market has been sideways for quite some time, and now that we are at the bottom of that range, it makes a certain amount of sense that we would rally to continue the back-and-forth action that we have seen for so many months. I am not trying to reinvent the wheel here, I am just trying to take advantage of formations that have been obvious for some time, and therefore I think a lot of people will be looking at the same trade. In general, I like the idea of buying dips as they occur.
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This article was originally posted on FX Empire