There is a tendency amongst professional analysts when doing these year ahead outlooks to just extrapolate current market trends forward for another year. This is the safe thing to do, but more times than not throughout the course of the following year the markets will throw a curve ball that challenges that sound December thinking. For this reason I like trying to be on the other side of the coin when doing these year ahead outlooks. Using this logic, Gold looks interesting in 2016. In Q415 it fell to its lowest level in 6-years. Sentiment not surprisingly accompanied this decline in spot to record negative extremes not seen in years. As a contrarian, these are the types of things I like to see as it suggests there will be plenty of fuel to drive a move higher should that “curve ball” materialize. The long-term chart also paints a compelling picture for the metal as the decline from the 2011 high, while persistent, still looks to be just be a retracement within the context of the broader advance that started in 1999. If this is the case, then the 885 area could prove pivotal in 2016. The beginning of the 2nd quarter looks quite important from a timing perspective and I suspect Gold could surprise many in 2016 by strengthening thereafter.
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Source: Daily fx
