Gold prices could strengthen this week. If gold prices are able to break above $1,280 a run up to $1,320 should not be ruled out.
What Should Help Gold Prices
The primary factor driving gold prices higher this week is the Chinese Lunar New Year. The Lunar New Year holiday starts Friday, 31 January. The Lunar New Year is traditionally a strong period of gold buying among the Chinese. Chinese gold dealers are buying in advance of that holiday. Some of them waited in early January, when prices began rising, hoping prices would fall later in the month. Now these dealers need to purchase gold at higher prices, since prices did not subside relative to levels seen in early January.
Additionally Vincenza d’Oro, the big gold jewelry show in Vincenza, Italy every January, was very well received with active buying by the jewelry wholesalers and retailers from jewelry manufacturers, boosting demand for gold for fabrication into jewelry and stimulating additional bullishness in the trade.
Developments in emerging market currencies and the global equity markets also are expected to play a role in influencing the price of gold. Renewed concerns regarding the impact of Fed tapering on emerging market currencies and equity markets, is likely to benefit gold. At least initially, some of the funds that are pulled out of these markets are likely to enter the gold market. The gold market has had one of its worse years in recent history making it attractive at present levels. Even when a small amount of funds from the equity or currency markets move into gold it can have a large impact on the price of gold due to the relatively small size of the gold market.
Source Seeking Alpha