Gold markets have gone back and forth during the course of the trading session on Monday, as we continue to see a lot of back and forth action just below the 50 day EMA. Quite frankly, when you look at the short-term charts, it is obvious that the markets have no real directionality at the moment, so with that in mind it is probably one that short-term traders will continue to be attracted to. That being said, the last thing you want to do is put a huge position on, so you need to be very cautious about how aggressive you get.
The market certainly has a lot of noise as of late, so I think you need to pay close attention to the 50 day EMA above, and perhaps more specifically, the $1800 level. The market breaking above the $1800 level on a daily close could open up quite a bit of momentum to the upside, perhaps offering an opportunity to reach towards the $1830 level, but it is going to take quite a bit of momentum to make that move happen. All things been equal, it does not seem like we have the type of momentum at this point in time but that daily close would of course be a huge turnaround.
To the downside, if we break down below the $1782 level, which happens to be the low of the Friday session, then it is very likely we go looking towards $1760 level underneath, an area that has offered a bit of support recently. Keep in mind that gold does have a little bit of a negative correlation to yields in America, and everybody and their mother is currently watching the 10 year yield right now. The higher it goes, the more gold is probably going to struggle, but it certainly looks as if bonds are oversold so therefore, I think a bounce back to the top of the range in the gold market is completely possible.
You should also keep in mind that gold has a little bit of a safety trade aspect to it, but right now that is probably being ignored due to the fact that everything is being sold, not just gold, but stocks, bonds, crypto currencies, and of course commodities. Because of this, the market is very unlikely to have an easy go over the next several days, so I do think that it is probably only a matter of time before we see more back-and-forth.
