Gold markets rallied significantly during the trading session on Thursday, and although there will be some limited electronic trading open for Friday, it should be kept in the back of your mind that Friday is Good Friday, and therefore it will have very little in the way of liquidity. With that being the case, I would not read too much into whatever happens during the day on Friday, and it should be noted that the limited trading in the market probably is better off left alone.
The market is one that moves inversely to yields, so I think that the 10 year note needs to be paid close attention to. To the downside, if we were to break down below the recent lows, I think that the market probably breaks down towards the $1500 level. That would be a rather big move, and therefore it sets up quite nicely.
On the other hand, if the market was to break above the $1750 level, the market could go looking towards the 200 day EMA which is closer to the $1800 level. The $1800 level of course is a large, round, psychologically significant figure, and an area that I think would attract quite a bit of attention itself. If we were to break above there, then it may allow this market to go to the $1850 level, and perhaps even extend for a bigger move to the upside. That being said, it would take quite a bit of momentum to make that happen and I just do not see it in the short term.
The fact that we are closing towards the top of the candlestick does suggest that perhaps you may have a little bit of momentum, but there is so much in the way of negativity above that I would be very cautious about getting too excited about going long quite yet. In fact, I think that you need to pay close attention to what happens on Monday for the signal, because with the lack of volume and significant players in the market on Friday, it is hard to imagine that it will be anything more than noise during the session, as short as it will be on the Globex platform. As far as CFD markets are concerned, I would probably stay out of them altogether.
