The gold markets initially tried to rally on Wednesday but gave back most of the gains. That being said, we continue to respect the same trend line from a couple of days ago, so it certainly makes sense to suggest that perhaps we are building up the proper inertia for a bigger move. The market has been difficult to deal with over the last couple of days because every time we rally, sellers jump in to push the market lower. That will more than likely continue to be the case, at least between now and the jobs number Friday. After the jobs number on Friday, we may have a bit more clarity, but there are some certain technical factors that I see on the chart that I will probably pay more attention to than anything else.
The most obvious one is the trendline that I mentioned previously, as well as the 200 day EMA which currently sits right at the $1800 big figure. The fact that the indicator is flat suggests that we do not necessarily have any longer-term direction, especially as the 50 day EMA continues to weave in and out of that indicator. Ultimately, that shows just how confused the market is, and as a result it is worth noting that the long wicks that we see above are probably the most reliable indicator.
If we break down below the Tuesday lows, then I think it shows continuation to the downside. As things stand right now, that is the most likely of scenarios from what I see, simply because we cannot seem to hang on to gains. The trendline giving way obviously would be yet another reason to think that we fall, which opens up the possibility of a move towards the $1750 level. After that, we are more than likely going to go looking towards the $1725 level. I think that the move lower is going to be easier for most people to digest, simply because we have seen so much in the way of momentum to the downside until the last few days. A break to the upside is going to have a lot of work to do, but if we can finally clear the $1820 level, then I believe that we could go looking towards $1880.
