- Gold markets have initially tried to rally during the trading session on Thursday but pulled back a bit as it looks like we are hesitating just ahead of the Non-Farm Payroll announcements on Friday.
- Ultimately, the 50-Day EMA in the downtrend line both come into the picture and offers certain amount of pressure.
- I think that the longer-term downtrend in gold market should continue, as interest rates in America continue to climb and of course so does the US dollar.
We are little overbought, but quite frankly we had been oversold in almost everything that was not the US dollar. Because of that, I think the market has been trying to correct itself and this type of volatility does not lend itself to stability, which does not lend itself to the idea of prices rallying. This is not just a gold issue, it’s an asset issue.
Waiting for Job Numbers
On a breakdown, I could see this market taking the $1700 on, and then perhaps breaking down to the $1680 level after that. The $1680 level had been the focal point for support in the past, and when we broke down below there it looked like we were ready to fall apart. We have now jumped back over it, but quite frankly would not be surprised to see it sliced through again. Every time we break above or below it, that weakens a lot of the “market memory” that you could see there.
The alternate scenario is that we take out the $1750 level and look toward the 200-Day EMA. I don’t necessarily think that happens, but it is something that could. This would almost certainly be in reaction to the idea that the Federal Reserve would probably have to slow down or even think about pivoting its monetary policy. A hot jobs number will not be your friend if you are long gold, because if the labor market is still strong, and there’s every reason to believe that it still is, the Federal Reserve is not going to be loosening monetary policy anytime soon as inflationary pressure should continue. Keep in mind that it’s much more palatable to clip coupons on a bond than it is to store tons of gold, which is what most large funds are faced with when trying to deal with this market.
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