Gold markets rallied again on Wednesday as we continue to see plenty of bullish pressure. At this point, it looks as if the market is going to continue seeing a lot of bullish pressure, especially as inflationary concerns continue to be a major issue. Furthermore, the overall momentum to the upside has been sideways for a while, working off some of the excess froth in the market. Now that we have done that, we are ready to continue the overall uptrend.
The $2000 level above is a large, round, psychologically significant figure, and it will attract a certain amount of attention. However, we have sliced through it previously, so I do not necessarily believe that the $2000 level will be a major barrier. Once we get above there, it is likely that we will go looking towards the highs again. There is nothing on this chart that remotely suggests that we should be short of gold, and I think that pullbacks will continue to be buying opportunities. Because of this, I think it is very likely that we will see plenty of people willing to support this market going forward. I believe that the $1950 level is a major support level, right along with the 50-day EMA which is currently sitting just below the $1920 level.
The US dollar has been rallying right along with the gold market, which is something that most people do not believe will happen. That is obviously not true, and all one has to do is look at the 1980s to see an example of when both went up at the same time. In an inflationary environment and a very “risk-off” environment, both of these markets can rally.
Looking at this chart, I do believe that we will reach the highs eventually, although they may not be as parabolic as they had been previously. Ultimately, this is a market that I think will continue to be one of the better performers, and I think it is difficult to imagine a scenario where you could be short. The market would have to break down below the $1880 level for me to think that the trend was over, which is obviously something that we will be seeing anytime soon, so I am only looking at the gold market from the upside.
