Gold Forecast: Markets Recover After Early Selloff

Christopher Lewis

It certainly looks as if the market is trying to find its footing, so I pay special attention to pullbacks near the $1850 level.

Gold markets pulled back a bit during the trading session on Monday, but then turned around to show signs of life again. As we stand right now, it looks as if the $1900 level is going to continue to be a place where we attract a lot of inflows on dips. However, gold markets have a lot of different things going on at the same time, so it is very likely that we will continue to see a lot of choppy and misdirected volatility.

The Consumer Price Index comes out in America on Thursday, which could have a significant influence on what happens next year. Nonetheless, it certainly looks as if the market is trying to find its footing, so I pay special attention to pullbacks near the $1850 level, because I think that is an area where we could see quite a bit of interest based upon the bounce in the previous resistance. After that, the previous downtrend line comes into play as support, and then the 50-day EMA comes into the market for support as well.

To the upside, if we could break to a fresh high for the last month or two, then it is likely that we could go looking towards the $1950 level, an area where we have seen selling pressure in the past. Beyond that, then we open up the possibility of a move towards the $2100 which was the all-time high, so it will attract a lot of attention. If you are paying close attention to the market, you can see that we have recently had the “golden cross”, which is when the 50-day EMA has broken above the 200-day EMA, and that is something that a lot of longer-term traders will be paying close attention to, with an eye on that longer-term resistance barrier in the form of $2100. That is an area that I think would attract a lot of attention and therefore a lot of resistance, but if we can break above there, then it becomes even more of a “buy-and-hold” scenario. On the other hand, if we break down below the 200,-day EMA then it is likely we will drop $100 rather quickly to go down towards the $1700 level underneath where we have seen quite a bit of support in the past.

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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