Gold Price Pushes Toward $1,300; Can Rally Continue?

New York (Dec 29)  Next stop is $1,300 for gold. What looked like a meltdown two weeks ago has turned into a powerful rally that is now attempting to take out the recent highs. The unprecedented rally has shown gains in gold and silver 11 out of the last 13 days. After looking so bad just 16 days ago, can this rally continue?

Since gold broke down on a weekly basis at $1,265, it has seen what looks like an unstoppable rally. To us, it looks more like a short squeeze and the buying is from those who got too aggressive going down, with shorts being forced to cover. Short-squeeze and short-covering rallies always look the best and we don’t expect this time to be different.

Although we are long-term bullish, at $1,300 with the speed and parabolic angle of this rally, we are short-term sellers. This rally should give way somewhere around the $1,300 level and probably will test the lows going down faster than it went up. Don’t be lulled to sleep by the short-covering rally.

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