Gold Forecast: Markets Continue to Float Around a Familiar Level

• Gold markets have rallied slightly during the trading session as we find ourselves near the $1680 level yet again.
• Ultimately, this is a market that is still in a downtrend, despite the fact that we have seen an attempt to turn things around.
• This is most certainly going to be more of the same going forward, and I think the 50-Day EMA would be something worth paying attention to.

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The $1680 level has been important for multiple times over the last several years, the fact that we broke through it the other day was a big deal. We have jumped back over it, but failed at that 50-Day EMA, which sits just below a longer-term downtrend line. Because of this, I think it’s only a matter of time before rallies get faded, especially if we start to see the US dollar pickup strength again.

Pay Close Attention to Interest Rates

Speaking of the US dollar, you need to be paying close attention to the interest rate market, which continues to show strength. The CPI number coming out on Thursday is going to be crucial, as it is by far the headline for the week. After all, everybody’s paying close attention to the Federal Reserve and what they are going to do with monetary policy. At this juncture, it’s likely that we will see the Fed takes center stage and therefore every time there is an inflation number, the US dollar will move in kind.

Because of the Thursday announcement, it’s possible that we may see a slightly higher gold market over the next 24 hours or so, but it is at that announcement that we will see a big move. If we break above the top of the downtrend line, then it opens up the possibility of an attempt to reach the 200-Day EMA, which is currently right around the $1775 level. That would need to see a lower CPI figure, and therefore people betting that the Federal Reserve is going to perhaps pivot or at least slow down its rate hiking cycle. This is all about the Federal Reserve and has almost nothing to do with anything else at this point in time. In fact, you could probably say that about most financial assets at the moment. I do not see that changing anytime soon and therefore you need to pay close attention to those yields.

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