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·         The gold market is taking full advantage of a quiet holiday Monday by pushing to key resistance levels as the U.S. Dollar index drops to its lowest level in three years.

·         While American equity markets are closed for Martin Luther King Jr. Day, futures continue to trade through electronic platforms. February gold futures were last at $1.341.30 an ounce, up 0.48% on the day, which is slightly off its overnight four-month high of $1,345 an ounce.

·         With the gold market continuing to build strong momentum, many analysts expect that it is only a matter of time before prices break the September high at $1,357 an ounce.

·         “Gold has now rallied by [$110] from the December low and apart from an [$18] correction last week and despite being overbought (RSI), the metal is currently targeting the next area of resistance starting from $1350/oz and going up to the September high at $1357/oz,” wrote Ole Hansen, head of commodity strategy at Saxo Bank in a research note Monday.

·         While many commodity analysts are bullish on gold in a weaker U.S. dollar environment, Hansen said that gold has outperformed most major currencies in the last month. He noted that gold is up almost 8% against the U.S. dollar, up 5% against the yen and yuan, up 4.5% against the pound and nearly up 4% against the euro.

·         At the same time, the U.S. Dollar Index, which is a basket of global currencies, is down 3% in the last month, he added.

·         While there is still room for gold to push higher in the near-term, in an interview with Kitco News last week, Hansen said that he would like to see a modest correction in gold prices in order to create a sustainable long-term rally.

·         “Despite overstretched momentum indicators, a correction remains elusive at this stage with gold being supported by continued dollar weakness and steady real yields amid rising inflation focus,” he wrote in his report.

·         Hansen isn’t alone in his expectation for gold to test the September 2017 high, with many analysts saying that they are bullish on gold as prices remain above $1,300 an ounce.

Reference: Kitco