Gold markets have stabilized a bit during trading on Monday, as we are hanging around between the 50-Day EMA above and the 200-Day EMA below. All things being equal, the market is likely to continue to pay attention to the 38.2% Fibonacci level, and of course we are in a situation where there is a lot of noise in the general vicinity.
All things being equal, you should pay close attention to the interest rate markets, because as rates rise, that can work against the value of gold. Furthermore, there’s a little bit of a geopolitical premium in this market as well, as the war in the Middle East seems to be contained, so that has brought down the demand for gold. If things get out of control, then it’s possible that gold will rally again, which obviously would be a safety trade. Keep in mind that the market will continue to be very noisy, but even though we have broken down rather significantly, we still have a long way to go before we would negate the entire move to the upside. At the very least, we would need to break down below the 200-Day EMA, perhaps down to the 50% Fibonacci level.
Looking at the size of the candlestick for the trading session on Friday, it’s obvious that things had been very negative during that session, so if we were to turn around and take on the top of that candlestick, it would be a very bullish sign and at that point I would anticipate that gold could go look into the $2000 level above. At this point in time, short-term pullbacks do look like they are likely to be bought into, due to the fact that there are so many different things out there going on right now that are making traders nervous. Beyond that, we have a lot of money printing, and that of course can help gold as well. In general, this is a situation that will continue to see a lot of volatility, so make sure that your position size isn’t too bad, as it can cause major issues in this type of environment to your account.
Source: forecasts
