Gold, the world’s favorite metal, went from having an encouraging Q4 in 2015 to being the subject of many analysis and investigations in the beginning of 2016. Key levels seem to be tested and trends are created and broken on a daily basis. The question on everyone’s minds is pretty straightforward: Which is more powerful? The FED raising rates or the people’s decision to invest in the safe haven metal, like they have done so many times in the past?
In the last quarter of 2015, Gold has known some fluctuations. The top was set at the end of October around the 1200 area, with the chart bottoming down twice in December for a yearly and multi-yearly low at 1044. The general U.S. dollar bull trend is not doing the metal any good, while other fundamental news has not been great either.
The start of 2016 was synonymous with a new uptrend formation for Gold, which is currently sitting at a price of 1155 and looking to challenge the latest top set at the end of November. Another key level upwards would be 1300, touched in February 2015, while downwards there is much support in the area of 1040. Breaking that level downwards could mean bad news for the yellow metal, opening the door to the key psychological 1000 level. From there on down, nobody knows where prices could find support.
The main thing that will influence Gold prices in 2016 is, undoubtedly, the way the Fed and the other major banks play their interest rate cards. If most investors will consider the U.S. Dollar a better long-term bet than gold, prices can spiral down almost out of control, just as they did in the case of Oil. If that is not the case, Gold might return in demand and go up and up, back to 1300-1500 levels we were so used to in recent years. We will have, as always, to wait and see how the year progresses.