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Gold futures forecast

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Gold futures daily chart - 3rd December 2010

December gold futures closed firmly higher on Friday, ending with a wide spread up candle which broke and held above the key $1400 per ounce level once again, and closing up $25.30 per ounce on the day at $1413.80 per ounce. Friday’s price action was also significant as the precious metal finally broke above short term resistance in the $1380 per ounce region, and as such this has now become a strong platform of support as we look for gold to regain the longer term momentum of the last few months following the recent pull back and sideways consolidation of November. A further feature of Friday was the support from the 9 day moving average which provided a platform of support early in the trading session as the metal probed lower, before recovering to gather momentum throughout the remainder of the gold trading session.

The key for next week will be a break and hold above the $1425 per ounce high of early November, and once breached then this will give us a strongly bullish signal that gold is set to continue the longer term trend higher once again. My target for the commodity for the year end remains $1450 per ounce, with a subsequent move towards $1650 per ounce by the middle of next year.