Anzo Capital: Gold Price Monthly Forecast: Could the Market Be Somewhat Neutral?

At the beginning of the new year, spot gold rose slightly in Asia on Thursday (January 2) and is currently trading around $2634.10/ounce.High Head CapitalChristopher Lewis, a regular contributor to the platform Daily Forex and a veteran trader, published his monthly forecast for the trend of gold.

Christopher Lewis pointed out that "January could be very important for gold. This is because we have been seeing this bullish momentum in this market for a long time, and the question now is whether we can continue this momentum or whether we need to enter some type of range. At the moment, I certainly don't have a situation where I am willing to start shorting the gold market, but at this point I would have a bit of a hard time being overly bullish."

"I could talk about technical analysis, but it's clear that the trend is bullish," said Mr. Lewis. "I really don't want to go down that road because there are things I'm looking at that I think have a bigger impact on gold than things along the trend line."

"For example, the first thing to keep a close eye on is U.S. interest rates, and what's going on with 10-year Treasuries. As I write this, our interest rate is around 4.58 percent, which is very high and makes holding bonds more interesting than trying to buy gold and pay for all the money you need to store it. In other words, the higher the interest rate, the more attractive bonds are generally."

"The second thing I'm going to keep a close eye on is the geopolitical situation. Given enough time, of course the geopolitical situation could be positive for gold, but as things stand, it doesn't seem to be enough to make people overly aggressive in this market. That being said, any eruption in the Middle East could push gold prices higher, just like the one in Ukraine. I think at this point in time the market is getting tired of worrying about that, and in this environment, I think it might just be a minor issue at this moment, but you never know, we could see something really shocking happen that could change the whole outlook."

"The third thing I'm going to keep a close eye on is the dollar itself. Keep in mind that the dollar is considered a safe asset, so obviously both can rise at the same time. However, if we do see the dollar really take off and start to rise, then that could have an impact on gold as well. But as things stand, I think we're likely to see some sideways consolidation in January, if not slightly negative. It's not a sign to start shorting the market, but it could be a sign that the market could be somewhat neutral."

At 15:00 Beijing time, spot gold is quoted at 2633.84 US dollars/ounce.