Gold begins the year rallying up to test an area of important support/resistance near $1080-$1090 as Saudi/Iran tensions run hot:
Gold (Daily)
The factors supporting additional upside in gold are numerous:
- Saudi/Iran and overall Middle East tensions mounting
- North Korea nuclear test
- US equity market weakness to begin the year
- Favorable CFTC Commitments of Traders data
- Strong January seasonality for gold historically
And the list could go on. However, this brings us to the crucial moment that gold now faces – what if this rally can’t surmount the $1080-$1090 resistance layer? What will that mean for the yellow metal when some of the aforementioned supporting factors dissipate or even become headwinds (seasonality, CoT data, etc.)? Gold is in a crucial moment and I fear that a failure to decisively break-through $1090 will likely lead to new lows being reached very soon.