This is a market that looks confused at best, bearish at worst.
The gold markets have gone back and forth during the trading session on Friday, only to pull back from the 200-day EMA at the end. Ultimately, this is a market that looks to be stuck between two major moving averages, and as a result, it is difficult to see a clear shot in one direction or the other right now. Furthermore, the candlestick from the trading session did nothing to add any clarity, so I think we need to simply wait until we break out of this area.
If we break below the 50-day EMA, I think that the market is probably going to open a move down to the $1725 level, possibly even down to the double bottom that formed just below the $1700 level. It if that happens, then it is likely that we would see the markets go looking towards the $1500 region. This obviously would accompany US dollar strength, so it would be very interesting to see the correlation play out. If we get a huge boost in yields again, that might be the catalyst for this market to fall apart.
On the other hand, if we break above the top of the 200-day EMA and the $1800 level, then it opens up the possibility of a move towards the $1850 level, followed by the $1950 level. That would more than likely accompany a massive sell-off in the greenback, so keep that correlation in mind. Also, we would have to see yields at least stabilize, if not fall significantly in the US bond market. I do not necessarily know that that will happen in the short term, so I think at best we are probably going to see more of a grind sideways in the gold market. However, as soon as we get some type of impulsive candlestick, then we could get involved. Until then, it is very unlikely that this is a market that you should put a lot of money into. Inflation expectations are all over the place, so that has played havoc in the bond market, which by extension plays havoc here.
This is a market that looks confused at best, bearish at worst. I think there are a lot of things out there, including the rise in coronavirus figures, that could knock this market and the US dollar round. Trade carefully.