Currently failing to break $1000

As of today, gold sits at $924, having failed to break decisively above $1000. Obviously a surge above this level can’t be ruled out, but historically gold’s best price action often comes in the first quarter of the year so there may be a long wait for the next leg up.

Another consideration is that stocks and other riskier assets have shown some strength of late. Part of gold’s appeal in recent months has been its safe haven aspect, so as market participants start to become less risk-averse gold could struggle to breakout.

It seems more likely that gold will consolidate within a broad range of $700 to $1000 until it becomes clear to the market that monetary reflation through concerted quantitative easing is really starting to take hold.

On the plus side, as other countries continue to compete to devalue their currencies, gold should stay the overall winner. On the negative side, there may be further global deflationary scares to come which could push gold down again like in October last year along with everything else.