By Neils Christensen of Kitco News

Friday January 16, 2015 3:31 PM

(Kitco News ) - Safe-haven demand helped gold prices end the week at its highest level since early September and according to most analysts, ongoing volatility should continue to support gold in the upcoming shortened trading week.

Open floor trading of Comex February gold futures settled Friday at $1,276.90 an ounce, up $53.90 or 4.41% since Monday.

The strong move in gold also helped to drive up silver prices as Comex March silver futures settled the week at $17.750 an ounce, up $1.255 or 7.61% since the start of the week.

Although U.S. markets are closed Monday in celebration of the Martin Luther King Jr. holiday, volatility will likely pick up Tuesday where it left; analysts anticipate that markets will continue to recover from the aftermath of the Swiss National Banks sudden decision to discontinue the currency peg against the euro, analysts said.

Traders and investors are also look forvolatility to remain high as speculation surrounding Thursdays European Central Bank monetary policy meeting continues to grow.

The rollercoaster ride is far from over… as upcoming ECB QE will refocus the spotlight on the monetary policy divergence themes, likely continuing to place stress on US markets as global investors reposition, said Gennadiy Goldberg, U.S. strategist at TD Securities.

According to some analysts, markets have priced in a 75% chance that ECB President Mario Draghi will announce an expanded quantitative easing that include the purchase of sovereign bonds.

Bill Baruch, senior commodity broker at iiTrader, said the key will be in the details of the program, which he added will probably disappoint the markets high expectations.

I think the risk is that the ECB under-delivers. It is going to add uncertainty to the marketplace, and gold is going to look attractive, he said.

Although Baruch didnt give a time-frame, he said that with golds current momentum, he expects to see prices test the next key psychological area of $1,300 an ounce.

The path of least resistance for gold is higher, he said.

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Axel Merk, president and chief investment officer of Merk Investments, said that nobody really knows what Draghi is going to do and that uncertainty is going to help gold in the near-term.

He added gold should still perform well after Thursdays meeting because markets will then focus on the Federal Reserves monetary policy scheduled the following week on Jan. 28.

The Fed has been fairly quiet with their optimism. Everyone thinks they are going to move forward with a rate hike but Im not so sure, he said. Real interest rates are negative right now and gold will do well in this environment. I am happy with my gold positions.

Ken Morrison, editor of online newsletter Morrison on the Markets, said that he is not convinced that gold will be able to maintain its momentum.

He added that the gold price has hit and taken out his near-term target of $1,250 an ounce and that he would expect to see some profit taking next week.

If I were long gold at these levels, I would be looking at taking some of my profits off the table, he said.

One of the reasons why gold has rallied is because of the anticipation of looser monetary policies in Europe; however, with the decision already priced in, he would expect to see a sell-off on the actual event, Morrison added.

Turning to American markets, U.S. data reports are relatively light until mid-week, with the release of housing data; the week ends with an early view of the manufacturing sector, which thanks to recent regional reports, is fairly mixed.

Looking at housing starts, which will be released Wednesday, economists at Nomura said that they are on pace to beat 2013 numbers but construction is still down by historical comparison.

They add there is still a long way to go in the housing market recovery.

Also on the radar next week is the 45th World Economic Forum Annual Meeting in Davos, Switzerland where the international political, economic and business leaders meet to discuss the challenges facing the world. The meeting will be held from January 21 to January 24.