Gold markets got crushed during the trading session on Thursday as the initial Jobless Claims came out better than anticipated, having people run towards the dollar in some type of delusion that the Federal Reserve was going to suddenly taper. That is not the case, and regardless of what people think about inflation, the reality is that the Federal Reserve is not going to do anything to allow interest rates to rise too quickly. If that is going to be the case, then the “rising rates working against gold story” probably is not going to have much wiggle room.
Underneath, the $1850 level should be supportive, followed by the downtrend line. After that we have the 50 day EMA and a whole mess of trading. This looks like a market that is probably going to probe a little bit lower before finding support and possibly turning around. It is worth noting that the breakout above the downtrend line was something to pay attention to, but the question now is whether or not we can recover before we go into the weekend? I anticipate that the close or at least the end of the day today will probably give us a huge signal as to where we are going next. Remember, as the jobs number comes out, liquidity becomes a major issue as nobody really wants to put money to work, so therefore if later in the day when everybody goes home that we see what people truly believe.
It is not until we break down below the 200 day EMA that I would be a seller of gold, but right now I do not essentially want to jump in and start buying immediately. If we do break out to the upside, the market then goes looking towards the $1950 level, possibly even the $2100 level over the longer term. Obviously, that is not a quick kind of trade that I think you can just jump into and expect to cash out of rather soon, but if you are more of an investor that is what I would be looking for as things stand right now. All things being equal, I think the only thing you can really count on is a lot of choppy behavior that is going to give us opportunities from time to time if you are patient.