Gold Forecast: Continues to Take Off

• The most obvious thing that I see here is that gold continues to power higher, and I do think that it is probably only a matter of time before we see this market really take off to the upside.
• After all, we have seen a lot of volatility, but most of it has been to the upside. With that being said, I think we have a situation where traders will continue to look for “cheap gold”, and therefore would be more willing to jump in on short-term pullbacks, but we are also in the process of a bit of a “melt up” as well.

A plethora of reasons

This whole plethora of reasons to believe that gold will continue to go higher, which is to say that I don’t really have an argument to make any type for shorting this market, mainly due to the fact that the reasons are so long in pressing that traders will have to look at this through the prism of a “one-way trade.”

The most important reason that I see at the moment is that the market continues to have to digest the lot of geopolitical tension around the world, not only in Ukraine and Russia, but also in the Middle East. Furthermore, the market is likely to see central banks around the world hoarding gold as a bullish sign, with India, Russia, and China all being very obvious about their desire to buy more. Beyond that, we also have to keep in mind that interest rates around the world continue to drop, and that of course is a very bullish sign for gold over the longer term.

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Short-term pullbacks at this point in time will continue to be bought into, and I do think that there are a multitude of other traders out there willing to get involved near the $2600 level, the $2530 level, and of course the 50 Day EMA underneath there. At this point, I think there are far too many reasons to think that this market goes higher to fight it. The one negative thing that I can see is that the Relative Strength Index has shown itself to be overbought. However, that only sets up a “buy on the dip” scenario.

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