In our 2017 preview, we noted that Gold was ending the year in a stabilization pattern after falling sharply from the November highs. This fall saw the yellow metal drop from $1330 to $1120 (16%) in just over a month.
So far this week, Gold has moved from around $1140 to the current level of $1180. We feel this move is a combination of short-covering and a generally weak tone in the US Dollar. Technically, Gold has posted its first close above the 30-day moving average since November 9th, which suggests that this corrective move has more upside potential in the near-term.
Our base case is that the US Dollar will continue to consolidate from its sharp rally over the last two months, which will lift Gold prices higher. The daily charts point to the November high of $1220.00 as the next significant upside target within this corrective phase, and a good place to exit long positions.