- Gold markets have rallied significantly during the trading session on Tuesday but have also shown quite a bit of hesitation as the market has been very noisy.
- At this point in time, the market is likely to remain very noisy, especially as the market has been thrown around by the idea of whether the Federal Reserve is going to be extraordinarily tight, or if they are going to acquiesce and start behaving like the Australians or the Canadians.
- The jobs number that came out during the session on Tuesday, known as the JOLTS, shows that there are 1 million job openings more than thought were available.
- This means that the inflationary headwinds will continue, therefore it’s likely that we continue to see a lot of downward pressure.
The $1620 level underneath has been massive support as we have formed a little bit of a “double bottom” which of course is a very important level to watch. If we break down below the level, then it’s likely that we go down to the $1600 level, and then possibly down to the $1500 level.
Dollar Likely to Continue Strengthening
I do believe that the US dollar continues to strengthen for quite some time, and therefore it’s likely that what we see is a short-term rally that is sold into every time we do bounce. I believe that the Federal Reserve is going to have to continue to do everything they can to fight inflation, and that means that they are going to be extraordinarily hawkish.
That hawkish behavior will of course continue to crush the value of gold, as interest rates will continue to rise, and large players will be much more comfortable holding paper and taking advantage of interest rates than storing gold. After all, it cost quite a bit of money to store gold, and therefore you need to pay close attention to that issue. The $1680 level is also backed up by the 50-Day EMA, so that need to be paid close attention to as well. If we were to break above there, then it’s likely that we would see a rather big move to the upside, but I would not hold my breath for that, because quite frankly it is a situation where that is your ceiling in the gold market now.
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