Gold Forecast: Can Gold Continue Going Higher?

Christopher Lewis

When you look at the gold market you can see that we have just formed a “double bottom”, so it certainly looks more positive than it did just a few days ago.

The gold markets have broken out above the $1750 level during the trading session on Thursday to reach towards the 50 day EMA. This is a relatively bullish turn of events, but the question now is whether or not we can continue to go higher? If we do break above the 50 day EMA on a daily close, then it opens up the possibility of the market reaching towards the 200 day EMA which is just below the $1800 handle.

Ultimately, this is all about interest rates in America, and whether or not they are rising or falling. If the interest rates were to continue rising, that does work against the value of gold in general. However, if yields continue to turn around and drop, then it is possible that gold may rally as a result. Nonetheless, when you look at the gold market you can see that we have just formed a “double bottom”, so it certainly looks more positive than it did just a few days ago.

All that being said, the US dollar did get beaten down during the trading session, but it is coming close to support in the US Dollar Index. Because of this, I think it will not be an easy ride higher if gold does in fact continue to go higher, but if we get a daily close above that 50 day EMA, I am willing to nibble on a small position and try to add to it. However, if we were to break down below the $1750 level again, that could send this market back into the consolidation area.

If we were to turn around a break down below the double bottom, that would be toxic for gold, but right now it certainly looks as if we are starting to turn the corner. The reason I am a bit cautious is because if we go higher, it is likely that we have a long time to take advantage of this, and therefore there is no actual rush. This will be especially true heading into the last day of the week, and I will be much more confident after the end of the day on Friday as to what my next trade is going to be. All things been equal though, it certainly looks as if we are starting to build base and perhaps turn things around.

Gold

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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