- Gold markets have been very noisy during the month of May, and we have even seen a massive negative weekly candlestick that confirms that the area above current trading is a massive barrier to overcome.
- Gold has broken above the $2400 level multiple times over the last couple of months, but he continues to struggle to go above there.
- At this point, we have to start asking questions as to what we have seen over the last 2 months.
Still Bullish Despite Noise
The market has sold off quite drastically during the course of the back half of the month of May, but it still has quite a bit of support underneath it. The $2300 level should continue to be important, but even if we give that up, it’s likely that the $2150 level will be a massive floor in the market. After all, the market has been so extremely bullish that it does make a certain amount of sense that we consolidate for a while, even if it is for a couple of months, to work off some of the excess momentum.
At this point, you could be looking at a potential bullish flag being formed, which of course could open up another $350 to the upside, at least based on the “measured move.” Even if we were to pull back, it’s also worth noting that the $2150 level is rapidly attracting the 50-Week moving average EMA, and therefore it’s likely that could offer a little bit of interest as well. In the meantime, it’s probably worth noting that we are in the midst of the summer trading season, and we could very well find ourselves somewhat range bound.
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Federal Reserve
Most of this is going to be about the Federal Reserve and what they are going to do about monetary policy. Traders have postulated for some time now that they will have to cut sometime between now and the end of the year, and they have even stated that it’s likely. However, inflation numbers continue to come out rather hot, so it does have people a bit confused at this point, and you are seeing that play out in the gold market. This is more likely than not going to present a “buy on the dips” type of scenario, but not necessarily in huge quantities.
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