- Gold markets have taken off on Tuesday as we have seen the US dollar take a little bit of a hit.
- There is some noise coming out of the crypto world that the exchange FTX is imploding, and that might have some crypto traders running into the gold markets for safety.
- Regardless, this is a situation where there is a massive move to the upside, although we have not quite broken out all a line that I would continue to pay close attention to.
As I look at this chart, the 1725 level has been important, and if we can break above there, then we could take a look at the 200-Day EMA as a potential barrier next. Any move above there then has most traders defining it as being in an uptrend.
Noise Ahead
However, if we were to turn out a breakdown from here, then we could reenter the consolidation area, which extends all the way down to the $1620 level. All things being equal, this is a market that I think will continue to be very noisy, as we have a lot of different things moving the markets at the same time. The first one of course would be interest rates, which are all over the place. It appears that the market thinks that it’s more of a “risk on” type of trade environment, at least for the day, and that of course has helped gold as rates have dropped and the US dollar has as well. However, the trend is still very negative, and it’s likely that the Federal Reserve will remain extraordinarily hawkish.
Keep in mind that the CPI numbers come out on Thursday, and that could slam this market right around in the opposite direction. The markets will continue to be noisy to say the least, so regardless of how you choose to play this market, you will need to use a bit of money management because quite frankly it could get away from you rather quickly. Gold markets are typically fickle to say the least, so nothing should surprise you at this point. If you can pay close attention to the 10-year yield, you may have a bit of a decent chance at making money here, as the negative correlation between rates in America and gold is strong and relatively well known.
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