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Forex pairs in this Article » XAU/USD
By: DailyForex.com

The gold market has been a difficult market to be bullish of over the last several months, as it seems that the sellers simply just won’t give up. However, as I write this in mid-December, there is an obvious place on the monthly chart that we are approaching that could send this market higher. As you can see on the attached chart, there is a major uptrend line just under recent price action that could make or break the overall trend that we have seen in place since 2001.

The shape of the recent action suggests that we might get a fight in this area. The area could also be consolidation waiting to happen, having price bounce between $1200 and $1400 in the meantime. This region has been somewhat containing lately, so this wouldn’t exactly be a surprise.

Gold production is down.

The gold production out of places like Africa continues to dwindle, and this will of course a supply strain given enough time. Because of this, the supply and demand curve could skew itself in the favor of the sellers as well. This would drive prices higher as well, and I believe this is eventually what will happen. The market has recently been driven by the US dollar more than anything else, and while the greenback continues to strengthen, this market should continue to have a bit of a weight around its neck. However, there is also the question of the Federal Reserve and tapering.

$1200 opens the door to $1000

If the market does in fact breakdown from here, the sellers could get the market down as low as the $1000 level. The $1000 level will be massive support in the end, and I believe that a drop to that level could be a nice buying opportunity on a bounce. However, I still think that the overall trend higher will continue, so my primary thought is that the market will eventually test the highs again. However, we might need some kind of “boost” first. I think that it might come out that the Federal Reserve cannot taper anytime soon. If this is the case, the market should skyrocket.

Between the lack of production and the employment situation in the US being stagnant, I am a buyer this year….

Gold Month 12213

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