Gold markets have broken down significantly during the course of the trading session on Thursday, as we have sliced through the $1800 level like it was not even there. Because of this, we are now hanging about the $1785 level, an area that has been supportive more than once in the past. Because of this, it will be interesting to see what happens over the next day or so as we have the jobs number coming out on Friday. This obviously will have a direct effect on the US dollar, and therefore could throw quite a bit of volatility in the gold market.
Regardless, the biggest thing that we are paying attention to at this point in time seems to be interest rates in the United States. They are climbing, which of course is not good for the gold market in general. With that being said, I believe that we are now going to test this major support level and see whether or not the market can hold.
If it does hold, then the $1830 level above is the “ceiling in the market” for the short term, and I think we would simply continue to consolidate overall. However, if it does not hold, then it is likely that we go looking towards the $1750 level, an area that has been supportive and resistive more than once. It is also a “midcentury mark”, so that in and of itself probably attracts a certain amount of attention. It is worth noting that the 50 day EMA and the 200 day EMA are both flat at the moment, hanging about the $1800 level. This tells you that we are not necessarily in any kind of trend, so the default attitude of the market is going to be to go back into consolidation, as it seems to be the most comfortable hanging about in that attitude.
We could get a major change in attitude due to the jobs number, but more often than not by the time we get to the end of a jobs day, the market will have gone back and forth and essentially solved nothing. I anticipate that is more than likely going to be the situation here, so I would not expect huge position changes by larger traders. Ultimately, I think the market is still trying to find its longer-term attitude.
