Gold off to a good start in 2017

At the start of the year, I wrote about positive gold seasonals to start the year. So far, that's been a good trade with prices up 3.14% ytd.

The gains have been fueled by a weak dollar but have stalled at $1183. At least until the past hour when gold briefly broke to $1185 before fading back.

If that level can break it will clear the way for a rally to $1200 where there is the confluence of the late-November highs and the 38.2% retracement of the drop since election night.

Further out, gold isn't looking so great. The breakdown in the second half of 2016 knocked gold below some key support levels. The ongoing bounce is likely to fade when the US dollar reasserts itself and the Fed moves closer to hiking. Target selling in the $1200-1220 range in February.