The biggest problem that you're going to have with gold is actually coming from the silver market.
Gold
The gold market spent most of the month of December rallying, but as we got closer to the holidays, we got a slap across the face as it seemed like gravity finally came back. The biggest problem that you're going to have with gold is actually coming from the silver market. This is because there is a certain amount of external influence on the gold market from silver and vice versa. And of course, we have to worry about the overall precious metals situation.
That being said, out of the two metals, I still prefer gold despite the fact that obviously, silver can really take off to the upside, but it can also fall apart quite quickly. It's worth noting that the New Year's holiday and, of course, Christmas both played games with liquidity, but when I look at the weekly chart of the gold market, it looks like we have plenty of support all the way down to the 4,000 level.
Buying the Bounce
So as a trader, my job in the month of January is going to be buying the bounce, perhaps on the daily chart, and accepting the fact that I'm not going to pick the exact bottom on this pullback that has been playing out. Over the longer term, I suspect that we probably still have a potential move to about $4,800 based on the ascending triangle that had been broken out during the month. But I also recognize that we may have to stabilize a little bit.
Quite frankly, the precious metals market, and not so much gold but more so silver, has been out of control. That exhausts markets. And I do recognize that there's a high probability of January being a lot more measured, but I still think overall it will end up being a fairly positive month. Central banks around the world continue to hoard gold, and of course, there are plenty of economic concerns, especially in the debt levels around the world. And as a result, I think gold still gets a bid in January. I do think, however, that it might be choppy with more of an upward bias than anything else.