If you look at the , you can see that gold has been in consolidation since early 2013.
I truly believe we will break the trend this year, with fundamentals supporting this move.
We may not initially break the trend this month, however the only downside risk I see is to the 1230-1240 area (my thin line).
This pullback was a buying opportunity, and a lot of noise is being made about nothing really.
As I said in my post, I saw a potential draw down to 1230-1240 as a worst case scenario, and to be honest, I don't even see us going that low anymore.
We will likely bottom out in the 1250-1260 range, and then attempt a new high (which I believe will bring us past 1300). The hard economic data has been garbage for the US (which will impact rates), and the Atlanta Fed even has the GDP outlook at 0.5% which is awful (this is also down from the 3.4% they predicted in December/January area). As I said in my post I am a long-term investor, and have been long gold since the last major drop (1120's area), and have only sold a small portion of my position, which I ended up re-buying during a dip. We ran up directly from 1195 area to 1296 in less than a months time, falling back to this area (1260) is very reasonable, and does not indicate a bearish outlook on gold (no matter how badly people want it to).
Every month we are beginning to settle higher with gold, last month all the bears got excited when we fell from 1260 area to 1195 area, claiming we will see sub 1000. They failed to realize that there are healthy pullbacks in every bull rally, as we rallied pretty much straight from 1129 to 1260 area.
I closely watch the 10Y, and the USDJPY as I believe these two have the closest relationship with gold.
At the end of the day this is just my opinion, and I believe anyone should trade using their own analysis, as that's the only way you will really have confidence in your trade.
However, if it does, the lowest I believe it will fall will be the 1240 area.