The gold market rallied slightly during the trading session on Monday afternoon initially gapping lower. That being said it was the Martin Luther King Junior holiday, so of course there were a lot of traders away from their desks. That being said though, the market is bullish and has been for some time. The market has found quite a bit of support underneath at the $1550 region, and now it looks like we are ready to continue the overall long term uptrend. Even if we did pull back, I see a multitude of areas were buyers will probably jump in and try to take advantage of value as it occurs.
The $1550 level, the $1525 level, and then the 50 day EMA all offer areas where I would expect value hunters to come back into the marketplace. To the upside, if we could wipe out the massive candlestick from a couple of weeks ago, then it’s likely that we could go much higher. The market would then find a way to go longer-term higher, but I think this is a market that will continue to be very volatile, based upon the idea of central banks around the world continuing to use loose monetary policy. That being said, I like buying dips and I don’t have any interest in shorting this market. Even if I knew that it was going to break down on Tuesday, this is a market that I simply look for buying opportunities and have no interest in shorting, as the trend has been so reliable.
Looking at the chart, you can make an argument for the idea of a bullish flag, but that takes a bit of artistic license. Nonetheless, it also has the same thing to me, that the market is going to go higher over the longer term. I like the idea of buying pullbacks as it offers plenty of value in a market that has the 50 day EMA starting to race towards the upside, perhaps looking towards the $1525 level in the short term. Overall, this is a “buy only” situation, and I do think that it’s only a matter of time before we break out to fresh, new highs. Not only do we have loose monetary policy other, but we also have the very real possibility of some type of geopolitical situation that could come into play as well, so all things being equal it looks like gold goes higher.
