Gold markets initially tried to rally during the session on Wednesday, but struggled near the $1170 area. We are starting to see a bit of resistance just above, and I think it’s only a matter of time before the sellers come back. I have no interest in buying gold although I recognize that we could go a little bit higher, before the sellers take over. Quite frankly, any downtrend that has been so strong it’s foolhardy to go against it.
The $1200 level above is the absolute “ceiling” in this market as far as I can tell, and therefore I have no interest in trying to fight the trend until we break above that level on a daily close. Since that’s nowhere to be found at the moment, I feel that the sellers are going to reenter the marketplace. Of interest, will be the jobs number, as it will have a massive influence on what happens with the Federal Reserve and interest rate hikes going forward. As a bit of a “knock on effect”, we could see the US dollar strengthened on a good jobs report, which of course would work against the value of gold yet again.
I still have a target of $1100, but I recognize that the easy money selling gold has already been had. Typically, the market will be bouncy but with a negative feel to it. I think eventually we could go as low as $1000, which I would consider to be the absolute bottom. I don’t know if we make it that far, but one thing’s for sure: we certainly are going higher anytime soon, at least not for a significant move. The only thing that could change that in my estimation is if the Federal Reserve was to explicitly say they weren’t going to raise interest rates this year, which seemed very unlikely.
