- The gold market has rallied a bit during the trading session here on Friday in what would have been thin conditions and a shortened day for futures markets.
- Half of Europe was away for Boxing Day or something similar to it, and most Americans do not go back to work on the day after Christmas anyway and choose to take a 4-day weekend, sometimes even a 5-day weekend.
With all of that being said, this is a market that has been extraordinarily bullish for some time, and I just do not see that changing anytime soon. Therefore, I look at this as something that you have to look for dips to take advantage of. Those dips offer value in something that is very obviously extraordinarily desired by market participants globally.
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Central Bank Policy and Market Momentum
Furthermore, you also have to keep in mind that markets will be looking at central bank purchases as a major driver, and I do think that it is probably only a matter of time before buyers return if we do, in fact, get some type of short-term pullback. Central banks around the world continue to loosen monetary policy; that generally is good for gold as well. Then there are a lot of debts out there that are going to have to be settled soon, right along with geopolitical tensions, so it all lines up quite nicely.
Or, for those who just simply follow the charts, there is a lot of momentum. When you look at the previous ascending triangle, it does suggest a move to $4,800, maybe $4,900, depending on how you draw the lines.
At this point, I do not see that as an issue, and I think in the next couple of months we will be talking about $5,000 an ounce for gold. I have no interest in shorting. Anytime it pulls back, I look for it to form a V-pattern that I can take advantage of so that I am with the momentum re-entering the market.
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