Gold markets tested the crucial $1880 level on Tuesday but pulled back rather significantly. When the market started pulling back, word got out that the Russians pulled back some of their troops from the Ukrainian border, and that ended up pushing the market even lower. In fact, we reached down towards the gap underneath, almost filling it completely.
We have since bounced, though, as there were plenty of buyers of gold before all of this noise in the Ukraine happened. That being said, the market has shown itself to be noisy as usual, so it is obvious that we have quite a bit of noise just waiting to happen at the next headline coming out of that part of the world again. The $1880 level has been important more than once, so it will be interesting to see how that plays out. If we can clear that level, then it opens up the possibility of a move towards the $1900 level. The $1900 level is a significant important big figure, and an area where we had seen a lot of resistance previously as well.
Keep in mind that the US dollar has a certain amount of influence on this market as well, because when the US dollar suddenly takes off, that can put a lot of downward pressure on the gold market. That being said, it also depends on why the US dollar is rallying. If it is a sudden flight towards safety, then both can rally. That being said, I think that the market will continue to be one you need to be cautious with, as the volatility could do real damage to your account if you build up too much of a position. That being said, if we do get the breakout, it is likely that we could go much higher, perhaps even breaking above $1900 eventually. To the downside, we could go looking towards the 50 day EMA but that does not seem to be the case at the moment, especially considering how we have seen the market turn around and show signs of life later in the session. In general, this is a market that will continue to be one you need to be cautious with due to the fact that there are so many moving parts at the moment.
