Gold Outlook - 1/26/2015

After the recent breakout from the declining trendline and a move above the 1221 level, price of gold has risen to a high of 1307.80 before it pulls back to consolidate some of the gains. Historically, gold has acted as an inflation hedge or a safe haven asset. From recent US inflation data and the ECB concerns on deflation, the recent increase in gold prices cannot be attributed to inflation concerns. Therefore, the only other viable reason for the price of gold to rise is due to some possibility of a black swan event that caused money to seek gold as a safe haven.

(click on the chart to enlarge)


Looking at the daily price chart, the pivot level near 1255.60 and 1239 could be two possible levels gold could pull back to before it makes another move toward a higher high. These two possible support levels are also in confluence with the 38.2% and 50% of the Fib retracement on the recent swing.



By using Fib symmetry move projection, the 138.2% and 161.8% project potential price targets in confluence with the pivot levels of 1325.90 and 1346.80.



The price of gold will continue to rise until the market has sensed the worrisome concern has diminished or until the price of gold has risen to a speculative level.

Here is a chart of GLD, the gold ETF with potential price targets and support levels highlighted.