Gold Forecast: Markets Continue to Hover Near $1900

Christopher Lewis

In the intermediate term, gold looks as if it is trying to stretch itself out for a bigger move.

The gold markets went back and forth during the trading session on Tuesday, just as they had during the day on Monday. We had recently seen a bit of a breakdown, but then turned around to bounce again. The $1900 level is a large, round, psychologically significant figure, and will attract a certain amount of attention to say the least. With this being the case, we still have a lot of work to do, and gold may be looking for some type of catalyst to finally get going.

I do think that gold will have to make some type of decision soon, and it should be noted that the CPI figures coming out on Thursday could be the next major catalyst as traders around the world continue to worry about inflation, especially in the United States. That being the case, I think that it could be quiet between now and Thursday, but there are a couple of technical levels that should be paid close attention to.

The recent highs that we made last week being broken to the upside opens up the possibility of a move to the $1950 level. On the other hand, the $1850 level underneath should continue to offer support, right along with the 50-day EMA that is sitting just below it. The downtrend line that sits underneath there and the 200-day EMA also offer potential support, so I do not like the idea of shorting this market anytime soon. If we cross through all of that, obviously my attitude will change and I would become much more bearish about this market, perhaps shorting for a move down towards the $1700 level.

Breaking above the $1950 level is probably going to take a little bit of effort, but once we do, then I think it could open up a move towards the $2100 level. I do not expect that to happen anytime soon, so in the short term, it looks like we will get a lot of range-bound trading in this market, just like so many others we continue to see heading into summer. That being said though, I do think that in the intermediate term, gold looks as if it is trying to stretch itself out for a bigger move.

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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