The gold markets have been relatively quiet during the trading session on Thursday as we await for the Nine Farm Payroll figures on Friday. The $1825 level has been important resistance before, and it certainly looks as if it continues to offer that same resistance. The $1835 level above is the top of that overall area, which causes quite a bit of hesitation. If we break above the $1835 level, then it is likely that the markets will continue to see a lot of momentum jumping into the market.
If we were to break above that area, then it is likely that we could go much higher, perhaps looking towards the $1900 level. The $1900 level has been important in the past, so if we break above there it is likely that we could continue to go much higher. Having said that, it is very unlikely that the market does this very easily, so I think what we are seeing here is a potential lift out, but obviously we would need to see some type of catalyst going forward.
The size of the candlestick is nothing to write home about, as we are simply sitting in the same neighborhood and killing time. The 50 day EMA is sitting just below the 200 day EMA and both of those offer plenty of support. If we were to break through those moving averages, then it is likely that we go looking towards the $1780 level underneath where we had seen quite a bit of support. Breaking down below that level then opens up a significant selling opportunity.
All things been equal though, this is a market that is probably essentially “stuck at the moment”, because the bond market also has a major influence on what happens next. With central banks around the world looking to taper, but not necessarily raise interest rates, it seems that very few people are comfortable trading the gold markets with any type of conviction. One thing is for sure, we need some type of impulsive candlestick to start falling. I think we probably have noisy and difficult trading ahead of us, so if you are a short-term trader, you may look at the range as a potential play, perhaps on short-term charts. The markets will probably get more volume next week, as traders come back from holiday.
