Pay attention to the US dollar, because it can have a high negative correlation to the gold market, so this market will see a lot of volatility.
Gold markets gapped higher to kick off the trading session on Monday, reaching towards the $1800 level. The $1800 level is a large, round, psychologically significant figure, and I think a lot of people will be paying close attention to the market over the next couple of days. That being said, the 200-day EMA sits just above there and a lot of people will take a look at that area. Furthermore, the 50-day EMA is starting to reach towards the 200-day EMA, perhaps kicking off a “death cross”, which attracts a certain amount of attention.
If we do fall from here, I think there is a significant amount of support near the $1750 level, which is a large, round, psychologically “mid-century mark”, causing a certain amount of importance in and of itself. If we break down below there, then it is likely that the market would go looking towards the $1675 level underneath. If we break down below that double bottom at the $1675 level, then it is likely that we will go looking towards the $1500 level under there, which in itself will create quite a few headlines.
Pay attention to the US dollar, because it can have a high negative correlation to the gold market, so this market will see a lot of volatility. But if we continue to see the greenback strengthen a bit, it is likely that we will eventually see this market fall apart. However, if we break above the 200-day EMA, then it is likely that we could go looking to fill the gap above where we would then tag the $1860 level, the top of that major gap. Breaking above that opens up the possibility of a move towards the $1900 level, and then possibly even the $2100 level.
This is a market that I think continues to be very choppy, and it will likely be noisy enough to warrant using very small positions, only adding when the trade works out for you and breaks above or below one of these major levels mentioned previously.