Gold Forecast: Rallies on Wednesday

• Gold markets rallied a bit during the early hours on Wednesday, as it looks like we are going to continue the overall uptrend.
• That being said, the market is likely to continue to see a lot of a “buy on the dips” type of attitude, and at this point in time we have several different reason to believe that there are buyers underneath willing to sort the market out and continue to offer support.

Technical Analysis

The technical analysis for this pair has quite a bit of positivity attached to it, not the least of which being the fact that we have the 50-Day EMA underneath current trading, which of course sits on top of the $2300 level. The $2300 level is the bottom of the overall consolidation area, and therefore I think you’ve got a situation where every time we dip, there should be plenty of buyers underneath to take advantage of “cheap gold.”

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Just above, the $2365 level offers resistance, and could open up the possibility of a move to the $2400 level. After that, we then have the $2450 level offering a bit of resistance and it could be a bit of a target. Anything above there then opens up the possibility of gold rallying all the way to the $2500 level, which is my target given enough time.

On the downside, if we break down below the $2280 level, then I think gold really starts to unwind. At that point, the market is likely to find a lot of support due to the fact that not only had we previously been so noisy in that area, but we also have the 200-Day EMA that comes into the picture as well. Anything below the 200-Day EMA would certainly be thought of as a negative turn of events by most traders around the world.

All of that being said, the reality is that the market has plenty of reasons to be positive, not the least of which would be geopolitics. But we also have profligate spending by the Americans, which have been borrowing $1 trillion every 90 days. Sooner or later, that adds up to real money.

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