Gold markets have gone back and forth during the course of the trading session on Thursday as we await the results of the Jackson Hole meeting. There are Federal Reserve governors out there that have suggested that the tapering may come between now and the end of the year, and that has driven the value of the dollar backup after what had been a significant selloff. Gold of course is highly influenced by what goes on with the US dollar, and therefore the fact that we are choppy and noisy should not be much of a surprise.
When you look at the chart, you can see that the $1805 level is where the 200 day EMA currently sits, and we did of course form a bit of a “evening star” in that general vicinity as well. If the market was to turn around a break above that candlestick, it could open up a move towards the $1830 level. The $1830 level above could offer a significant amount of resistance, but if we were to break above there then we are likely to see this market go looking towards $1910 level.
On the other hand, if we turn around a break down below the Monday candlestick, it is likely that we go towards the $1750 level, an area that has been supportive more than once, and will attract quite a bit of attention in and of itself. Breaking down below that level opens up the possibility of a move down to the $1680 level, an area where we had seen a lot of support multiple times. If we were to break down below there it could send the gold market breaking down quite drastically.
All things being equal, the gold market is likely to continue to see choppy and volatile moves, but as soon as we get some type of clarity out of the Fed, we could get a little bit of clarity. The neutral candlestick that we formed for the trading session suggests that it is a market that is coiling up in trying to send the market in one direction or the other. We have several levels that we could pay close attention to, and therefore it should open up the trade in order to give us an opportunity to play the market due to interest rates and their effects.
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