Gold markets broke out significantly on Tuesday as fear continues to be a major problem around the world. With this being the case, it makes sense that gold continues to attract a safe-haven bid. The gold markets have been very volatile as of late, and I am afraid that they are only going to become even more so.
We did close above the $1920 level, so that satisfies my argument for gold to continue going much higher, perhaps reaching towards the $1950 level, and then eventually the $2000 level. With all of the risk out there, it is not a stretch at all to think that could happen in this environment. Ultimately, I think we may even go above there if things continue the way they have been.
On the downside, I would anticipate that the $1920 level will be supportive, as it is the top of the overall consolidation region that we had been in previously. The size of the candlestick is also rather impressive, and it should be noted that later in the day during New York trading, gold really started to build up a lot of momentum. I think at this point, you are starting to see an overall run towards safety, as the Japanese yen has also attracted a lot of attention, right along with the US dollar.
It is not until we break down below the $1880 level that I would be bearish of gold, and even then, I could make an argument for some type of recovery. I believe that the massive amount of headwinds out there will continue to make gold attractive, so at any pullback going forward, I will be more than willing to get involved in increments and add to an already existing long position. That is the best way I know how to describe this market as one that you will be looking for value in, and hopefully taking advantage of any type of “cheap gold” that you see. Without some type of good news coming out of Ukraine, I think gold is going to continue to become very parabolic. I do not have any interest whatsoever in selling anytime soon, but of course, I will let you know at DailyForex when the fundamental or technical setup changes.
