Gold markets have drifted a bit lower during the bulk of May, but it looks as if we are testing an area of potential support. I do think gold continues out of a part to play in most portfolios, but I also understand that the market is more likely than not going to continue to see a lot of volatility. Whether or not we get some type of huge momentum will be a completely different question, and therefore you will have to focus more or less on some type of range bound trading system. However, I do have a couple of parameters that I am watching on the chart to tell me whether or not we should go higher or lower for a bigger move.
- If the market were to break down below the $1900 level, it should cause a significant amount of downward pressure.
- At that point I would anticipate that the market could really start to fall apart.
- Furthermore, the 50-Week EMA will more likely than not cause a bit of a reaction, so once we break down below there the bottom will fall out in the market.
- I think it’s more or less going to be a situation where we will have more sideways action than anything else.
June can answer many questions
Furthermore, keep an eye on the $2000 level, as it is a large, round, psychologically significant figure, and captures the attention of a lot of traders. It is probably worth noting that the area has been sliced through a couple of different times and I think we have a little less action in that area than we once did. If we can break above the $2100 level, then it’s likely that gold will really take off to the upside.
Even though I do think that there are a lot of people out there looking to protect wealth, it’s worth noting that the pullback that we have just seen could be a potential “triple top” of the longer-term charts. If that’s the case, I think you have to look at this through the prism of whether or not we can see the market truly pick up momentum, or if we’re just at the top of the longer-term range. I suspect that during the month of June, we will have answers to all of those questions.
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