The gold markets fell hard during the session on Wednesday as the Federal Reserve released a statement after the interest-rate announcement that was more hawkish than anticipated. Because of this, the U. S. dollar gained strength, which of course works against the value of commodities, especially gold. With that being the case, the market should continue to fall from here, as the market looks set to test the $1200 level.
Break down below the $1200 level would of course be very bearish, and at that point in time I believe that the market should continue to go much lower. With that being the case, I am very bearish of gold and I believe that the session on Wednesday was a bit of a turning point. Given enough time, the market should go as low as $1000, but it won’t necessarily be a straight line down as no market moves in one direction without pullbacks and bounces.
Bearish action continues
When you look at this chart, you can see that the market has been bearish for quite some time, and as a result we are most certainly in a downtrend. The thing about gold markets is that they tend to trend for very long periods of time. This pullback should more than likely find a massive amount of support at the $1000 level, so I am most certainly bearish of this market until we reach closer to that level. However, I think that the buyers will most certainly step into the marketplace near that area as it will be considered value and the fact that the $1000 level is such a large, round, psychologically significant number and the fact that it was once massive resistance. I believe at that point in time the market could bounce significantly, and I would be very interested in going long on a supportive candle in that general vicinity.
I do believe that eventually gold will be one market that you want to start buying, but it’s not anytime soon. Structural problems with the U. S. dollar will continue to weigh upon it in the long-term, but at this moment in time, it’s obvious that the U. S. dollar is king again.
