The gold markets had a small pullback at the beginning of the day on Monday, but as you can see the $1310 level offered enough support to push the market back up. In fact, we ended up having a fairly strong day, and closed at the top of the range roughly. With that, I would also point out that the US Dollar Index fell below the 80 handle, which was a site of a significant support. The fact that we have broken down below there suggests that the US dollar should continue to weaken in the short-term. That generally helps out the price of gold, as it is obviously price in those very dollars.
With that being the case, I think that the gold market should go higher. If we can break the top of the range for the Monday session, it appears that we are breaking above significant resistance, sending the market looking for the next major resistance area, which is at roughly $1400. That is a significant move in my opinion that is simply waiting to happen.
Building and mounting pressure.
This market has been building in mounting serious bullish pressure underneath this resistance area, and the fact that we saw this market so bullish towards the end of the day suggests to me that we are starting to find real strength now. After all, look at the last few days, as there are nothing but long wicks everywhere. Although we have been at this price point roughly, the fact is we could hang onto it until the end of the day on Monday. That tells me that the buyers are starting to win out, and it’s probably only a matter time we break out to the upside with significant force.
The move higher will more than likely have a few pullbacks from time to time, and then should in fact allow short-term traders to get back into the markets over and over, pushing the market higher but in a somewhat choppy manner. Gold futures markets tend to be loved by short-term traders, so that of course makes sense. I am very bullish of gold at the moment.
