- Gold markets have rallied rather significantly during the trading session on Monday again, as we have seen a significant number of buyers jumping into the market over the last several weeks.
- We also have broken above a slight trend line, so that might be worth paying attention to as well. After all, the $1875 level was an area of interest previously, so now I certainly believe that this is a “buy on the dip” situation for most people.
- Because of this, I will look for those opportunities but unfortunately did not get one that I thought was good enough heading into the Friday Non-Farm Payroll announcement. Yes, we did pull back a bit, but I was hoping to get another 10 or $20.
It’s probably only a matter of time before we do get some type of significant pullback since we are overbought. In that scenario, I am more than willing to jump on the market and take advantage of that opportunity. I believe that the market is getting a little bit stretched, so if for no other reason than gravity, we get that pullback.
Volatility Expected to Pick Up
However, the CPI number on Thursday could really get people concerned, but it’s also worth noting that Jerome Powell is speaking on Tuesday. He could say something that blows up the markets and makes people run to the US dollar yet again. With that much in the way of the markets going in one direction or the other, I would expect volatility to pick up, not drop.
We must look at these potential moves through the prism of opportunity, but we also need to keep an eye on which direction we want to trade. I don’t have any interest in shortening gold, and even if you told me that it was going to drop $20 tomorrow, I wouldn’t do that. The market has clearly spoken, and at this point, it suggests that we have much further to go to the upside I do believe that by the time it’s all said and done we could be looking at a move all the way to the $2000 level. This will be especially true if the US dollar falls, although it’s worth noting that the negative correlation has gone from a -0.96 a couple of months ago to something closer to -0.38, meaning that we have broken that chain.
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