Stock markets have been on a wild ride this week and jittery investors have been busy buying gold as a form of insurance from the market volatility. Although the yellow metal has not embarked on any type of rip-roaring move higher, it has held it's value and even slightly increased during the market chaos, which is precisely what it's supposed to do during times like these.
Highly respected trader Dan Norcini of TraderDan.net (subscription required) believes gold's near-term prospects will be decided in the coming days:
Gold continues to seesaw back and forth around that obvious pivot point of $1280. That is where the battle line is drawn. If bulls can successfully push past this area and leave it in the dust, gold has a legitimate shot at psychological $1300.
Traders and investors would do well to watch the $1280 level as 2018 wraps up and the near year begins, as a quick leap to $1300 could be in the cards if the $1280 level is taken out:
If it does break through there [$1280] and holds its ground above that, some of those shorts selling there are going to run for cover. That will set it up for a potential test of $1300.
Just be careful, Mr. Norcini warns, as trading conditions can be extremely perilous due to decreased volume and year-end book squaring that appears in late December:
While I look forward to this time of year like most of us I must admit, I hate what it does to the markets. I wish they would just shut the things down after Christmas and leave them down until the New Year. It really is an enormous waste of our time.
Perhaps the new year will bring about more stable market conditions. We shall see!