Gold markets were very noisy during the month of August, as we initially fell down to the 38.2% Fibonacci level on the weekly chart, only to turn around and show signs of life again. By doing so, it looks as if the market is hanging on to the uptrend, and the recent pullback has been quite gentle, so I think it makes a certain amount of sense that we would see a continuation of the overall run higher. Furthermore, we have recently seen the US dollar soften a bit, so therefore it does give a little bit of credence to gold doing a bit better.
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- The month of September will be very much the same game that we have been seeing for the last several months preceding it.
- The Federal Reserve will have a major impact on what happens next, or perhaps what I should say here is that the perception of what the Federal Reserve will do is crucial.
- Recently, this is a market that has been trying to convince itself that the Federal Reserve will be softening its monetary policy anytime soon.
All things being equal, the 50-Week EMA underneath has offered support near the 38.2% Fibonacci level, and it does look like we are trying to recover from this area. If we can continue to go higher, then it’s likely that we could go looking to the $2000 level above. The $2000 level is a large, round, psychologically significant figure, and an area that I think is a nice target above. If we can break through there, then the $2050 level could be the next target. On the other hand, if we were to turn around and break down below the lows of the last couple of weeks, roughly $1880, then it’s likely that the market will fall apart, perhaps going down to the $1800 level, which would almost certainly see the US dollar strengthened at the same time, and then of course the interest rates rising in America could also provide that drag.
Nonetheless, this is a market that I think continues to go higher, but that doesn’t necessarily mean that it’s going to go higher quickly, and therefore I think you’ve got more of a “buy on the dips” attitude going forward, and therefore I think this is a situation where we eventually go higher.
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