Global equity markets were mixed overnight with Chinese and European markets lower, but gains posted in Australian and Russian markets. 

While we are somewhat skeptical that the force behind the gold rally of the last two weeks has been the result of improving classic physical commodity demand prospects, there is not a safe haven argument in position, nor is there definitive enough weakness in the dollar to suggest something else is lifting prices.  It is possible that the $75 washout from the November 27^th high put the gold market into a cheap zone.  In fact, the net spec and fund long in the gold market on the November/December break saw liquidation from a lofty 257,000 contracts down to 119,000 contracts as of December 12^th, and that probably balanced the market and set the stage for some bargain hunting buying on the dip below $1,240.  While we have indicated our skepticism on the bull case, the market would appear as if it is capable of returning up into the trading range that held the market in from late September until early December.  Therefore a move back into 1275-1300 is likely with critical pivot point pricing in the February gold contract seen at 1267.

Gold Feb ’18 Daily Chart