Gold Forecast: Markets Hesitate During Wednesday Session

• Gold markets initially tried to rally during the day on Wednesday but came back enough of the gain to show signs of hesitation.
• By doing so, the market is likely to continue to trade in a range that we are trying to carve out right now.
• This would make a lot of sense, because we are heading toward the holidays, and traders are starting to focus a lot less on markets, and a lot more on holiday celebrations.

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It’s worth noting that the $1800 level is in the middle of the consolidation area, so I do think that this is a situation where we could see a lot of trouble. The market breaking down below there then opens up the possibility of a move down to the 200-Day EMA, which is an area that a lot of technical traders will be paying close attention to. It’s also worth noting that the 50-Day EMA sits just below there and is rising, getting ready to form the so-called “golden cross.” While I’m not a huge advocate of the signal, I know some people do pay close attention to it, so it’s probably worth noting that it’s occurring.

Looking to Buy the Dip

I believe at this point in time we probably have a situation where we will have to figure out where we’re going next, but I do think that this is a situation where we are probably going to chop more than anything else. After all, gold markets have been in a nice trending channel for a while, but as we head into the holidays, the volume drops. In other words, we would need some type of catalyst to get moving forward.

I do believe this is a situation where it continues to offer value on dips, and traders will take advantage of that when they get the opportunity. It’s not until we break down below the moving averages that I would consider the uptrend busted, but we are most certainly in an area where you could see a lot of trouble. I anticipate that if we do get some type of sharp selloff between now and the new year, we could see buyers come back in and pick up gold as soon as liquidity returns. That being said, caution is the better part of valor, especially this time a year as we struggle to find volume.

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