The gold market rallied a bit on Wednesday but has also found plenty of selling pressure near the $1835 level. The gold market continues to slump in general and now looks as if it is threatening a significant uptrend line. The market breaking down below this uptrend line could be important to pay attention to, but I think there is even more support to be found just below near the $1800 level.
If the $1800 level were to be broken to the downside, that would almost certainly bring in fresh selling, allowing the market to fall yet again. At that point, I would anticipate that the gold market would fall apart. At this point, the gold market should fall rather quickly, perhaps opening up the possibility of a move down to the $1700 level.
The 50-day EMA is dropping at this moment, getting ready to break down below the 200-day EMA, sitting just above the $1850 level. We are very close to the idea of a “death cross”, which is a very negative turn of events. With that being the case, the market is likely to continue to see a lot of noisy behavior, and I think it’s also likely that gold is going to continue to see a lot of volatility.
Pay close attention to the 10-year note, because the interest rate situation has a lot to do with what happens next generally. As interest rates rise, it’s likely that the gold market will suffer as it becomes more practical to own paper than it is to pay for storing gold. The market has been very noisy as of late, and now it looks like the gold market may have a lot to do in the short term. However, if we were to turn around and break above the top of the candlestick for the trading session on Wednesday, that would be the first sign of strength, but we need to clear the $1850 level for it to be convincing. You will have to keep one eye on the interest rates in America, and another on the chart if we can break above the $1850 level, then it’s possible that we could test the $1880 level. Breaking above there would be an extraordinarily bullish turn of events. In that situation, we could be looking at a move to $2000.
