- Gold has initially rallied a bit during the trading session on Wednesday, but has given back some of the gains as it looks like we are hanging about trying to figure out where to go next.
- Ultimately, this is a market that will be paying close attention to $2,900, which of course has been an area of support over the last couple of sessions.
- Even if we were to break down below that level, then I think the market more likely than not will drop to the next support level right around $2,800 where I see the 50 day EMA.
All things being equal, a pullback like this probably puts more buying pressure as we had extended quite a bit to the upside. This is simply gravity coming into the markets, as we have gotten a bit ahead of ourselves at this point in time.
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The market is going to be looking for cheap gold at any time. And I do think at this point there are still a lot of concerns out there about tariffs. If tariffs do come to pass, and I think they are going to in one way or another, we will see traders protecting their wealth with gold. Now, I think the simplistic way to look at this is just simply the gold has been going higher for a while, and it should more likely than not continue to be that way.
I have no interest in trying to short the gold market and I think ultimately we probably reached the $3,000 level. After all, the market previously had been in the $200 consolidation range and now is expecting a measured move of $200 after that breakout, which leads us right to the $3,000 level. This is still my target gong forward, and as a result, I will continue to look to buy.
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