Gold markets initially fell a bit during the trading session on Thursday but look as if they are trying to stabilize. That is a good sign, considering just how vicious the previous session was. That being said, the market is still very much in an uptrend and should be traded as such. After all, there are a whole host of reasons to think that gold could take off to the upside, but you should also keep in mind that interest rates started to rally a bit during the trading session, so that may have had something to do with why gold was a little bit calmer than the previous session.
We seem to be hovering around the $2000 level in the futures market, which does make a certain amount of sense as it is a major headline number and will have a lot of psychology attached to it. Furthermore, it caused quite a bit of resistance previously so I do believe that we should continue to see it happen effect on the markets. Even if we do break down from here, I think there are multiple support levels that could come into the picture, not the least of which would be the gap below, near the $1965 level. It is worth noting that the gap was filled, but a lot of the time we will see a reaction later anyway. If we break down below there, then I think we are looking at the $1950 level as a psychological level and the $1920 level as a major support level based upon its previous resistance.
The US dollar has been strengthening at the same time, so sometimes that can come into the picture and cause a few issues. Nonetheless, I like the fact that we are stabilizing a bit after that massive selloff, so this leads me to believe that we may go back and forth more than anything else over the next couple of days. This will be especially true heading into the weekend, and it should be noted that could have a bit of an effect towards the end of the session on Friday. Nonetheless, one would think that there will be plenty of issues out there that could keep gold attractive to a lot of traders for a safety play and of course a hedge against inflation which seems to be running wild.
