Gold markets initially pulled back a bit on Tuesday but found enough support underneath to continue going higher. At this point, it looks as if the $1830 level continues to be somewhat supportive, at least in the short term. To the upside, the $1875 level could be targeted, and as long as we continue to see buyers willing to come in and pick up value, this is a market that should eventually go much higher.
That being said, keep in mind that the Federal Reserve meeting on Wednesday is a major event not only for gold, but most other assets as well. The market has essentially fallen apart since Jerome Powell suggested that there was going to be more tightening in the future, and it makes sense that we would see this market be highly volatile over the next 24 hours or so. That being said, the market is likely to continue to be difficult, but I like the idea of finding short-term pullbacks in order to take advantage of value. I would not get overly excited about putting a bunch of money in this market, at least not until we can get beyond the Federal Reserve FOMC press conference, when the markets will be looking towards the tone of the statement and answers to questions. Whether or not the FOMC raises interest rates during the day is very likely going to be a concern as well, but as the market stands, it looks as if it believes this rate hike will come in March.
To the downside, if we were to break down below the $1830 level, then the market could go back into the consolidation area underneath that is marked on the chart. Because of this, the market is likely going to continue to be noisy, but I do like the idea of going long unless Jerome Powell completely changes his tune, something that I do not think will happen as the market is starting to price in the idea of inflation driving the price of gold higher, so I think longer term we are ready to go much higher. Longer term, I do think that we will get a breakout unless we suddenly see a change of attitude from not only Jerome Powell, but the board of governors as well.
