Gold continues to pressure the resistance area just above ¥14,000 as the Bank of Japan looks very likely to continue working against the value of its currency. With this being said, while gold should go up against most currencies, the best rate may actually be against the Yen as the currency is being devalued.
This can even be translated over into the currency markets as the Yen is one of the weakest performing currencies recently. When trading gold, you must look at it through the prism of several different currencies to get a good and accurate look at what's going on. Quite frankly, most traders make the mistake of measuring gold in US dollars only, which only limits their potential returns.
When you know that a particular currency is being devalued or is simply out of favor, quite often gold will outperform in that currency as opposed to the other ones. Typically, the US dollar is being devalued, but in this particular environment that we have right now there is still a bit of a "safety trade" in play. This can be seen by the fact that while the gold markets have been somewhat quiet over the last couple weeks against the US dollar, against the Yen they've actually strengthen.
On this chart, you can see that there is a nice weekly trend line that the market has followed, and the red moving average line is the 100 day, or 20 week exponential moving average, which the markets tend to respect. As you can see, it is acting as support lately and also that we have quite a bit of resistance just above the aforementioned ¥14,000 level. If that level can get broken to the upside, is very likely that we will see a move to ¥16,000 before it's all said and done. This is mainly predicated upon the fact that we have something between a triangle and a rectangle of consolidation over the last six months or so.
While you may see nice returns against any currency, it makes sense that the Yen will be the weakest one against the precious metals in general. As the Bank of Japan cranks up the asset purchase program, this will flood the market with Yen again, and therefore devalue the currency even quicker than many of the other ones out there that are presently printing. The Euro will also be a relatively good currency to trade gold against in the future, but right now there seems to be a little bit of a bid in that particular currencies as the headlines tend to push it back and forth. Without a doubt, right now the Yen is the most straightforward trade against gold, and the one that you should be paying attention to.