- While silver has been taking most of the headlines, it is worth noting that during the month of January we saw gold piercing the crucial $5,000 level, an area that I thought it would be months before we took out.
Gold (GC)
At this point in time there is not much to say about gold other than it continues to impress. While silver has been taking most of the headlines, it is worth noting that during the month of January we have seen gold piercing the crucial $5,000 level and it does look like it has got further to go. In the meantime, though, one has to wonder whether or not there will be some type of pullback that is necessary.
I suspect that the answer is probably yes, but having said that I also recognize that there are a multitude of reasons as to why gold is going higher and that is something that has to be respected in this environment. A lot of it comes down to geopolitics, some of it comes down to the fact that central banks around the world continue to buy gold, there are heavy debt burdens, and of course there is a lot of mistrust globally at the moment. So this makes sense that suddenly gold is an asset that everybody runs to.
Long-Term Reliability and Technical Outlook
Again, silver has been the big headline across the world at the moment, but over the longer-term gold has proven itself to be much more reliable than silver and I think that is probably part of what will keep this market somewhat supported. The simple fact that it has not gone parabolic or dangerously overbought.
Over the longer term, I think we probably have much further to go, but in the short term I look at pullbacks as potential buying opportunities with an eye on the $4,800 level as an area of extreme value if we do in fact see it sometime during the month of February. Anything below there would kick off a much deeper correction, but right now I just do not have that as the most likely outcomes. I think most pullbacks will be rather shallow and traders will almost certainly take advantage of them as soon as they get the opportunity.
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