The last two months of the year have shown a very strong and quite unexpected growth of stock markets in Europe and North America. However, this growth was well justified by seasonal patterns of financial instruments' behavior.
According to seasonal factors, gold began to strengthen from mid-December and will continue to do so in January and February 2024. This growth may be supported by profit-taking on stock markets in anticipation of a correction. Profits will be transferred to currencies and safe assets like gold. Moreover, in terms of seasonal patterns, gold will strengthen against the U.S. dollar, which also traditionally grows in January and February. Thus, the price growth of gold will overtake the rising dollar.
From a technical point of view, Gold is now in a price channel limited by the levels of $2,000 from below and $2,080 from above. Looking for suitable entry points to buy Gold, it would be reasonable to enter on a rebound from the $2,000 level if the price reaches it. $2,030 per ounce may also be considered as a buying entry level.
Two levels can be targeted: 2,080 as the lowest buying level, and 2,110 as the highest one.
The Australian dollar exchange rate is closely related to the change in gold prices, as Australia is one of the world's major gold miners and exporters of the yellow metal. Gold and the Australian dollar tend to move in the same direction as they have a positive correlation. In terms of seasonal patterns, the Australian dollar also strengthens from December to mid-January.
The overall recommendation is to buy Gold.
Profit should be taken at the level of $2,080 per ounce. A Stop-loss could be set at the level of $2,000 per ounce.