- The gold markets have been drifting for quite some time, reaching down to the crucial $1700 area. This is an area that is worth paying quite a bit of attention to for multiple reasons.
- The market has been in a range for a while, and we are pressing the very bottom of it.
- Ultimately, I think this is a situation where we see the market needs to determine whether or not we are going to continue, or if we are going to finally break out of this massive range.
Breaking Through the 200-Week EMA
The 200-week EMA shows signs of support as well, and therefore if we were to break down below that level, it’s likely that this market falls to the $1600 level. After that, then we are looking at a move down to the $1500 level. In fact, if we do break down at this point, it’s very realistic that the momentum could come back into the picture and push this market much lower and quickly.
If we turn around and bounce, the market has a lot of concern between here in $1800 to overcome, and if we were to break above the $1800 level, then it’s possible that we could see this market reach the high of the overall range at the $2000 level. Quite frankly, almost all of this is going to come down to interest rates, as higher interest rates in the United States is like kryptonite for gold. If they start to turn around and fall, that would be the cue for gold to rally. Until then, I do think that gold has a lot of trouble ahead of it until something changes at the Eccles building.
Ultimately, any signs of exhaustion will be shorted over the course of the month, and really at this point, it’s very likely that we see the market offer plenty of opportunities as it has been so volatile. I would keep my position size relatively small because the market will get quite wild at times, and I just don’t see that changing anytime soon as the concerns about a global slowdown continue to be a major issue. The Federal Reserve is likely to remain very tight, so that could cause some issues, therefore it’s likely that we would see a lot of opportunity on short-term charts, most likely in both directions.
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