Gold markets initially pulled back on Monday a bit but have found buyers jumping back in to push ever so higher. The $1800 level above would more than likely be the next target, as the 50 day EMA sits there and of course it is a large, round, psychologically important figure. The 200 day EMA sits just above there, so I think at this point in time it is only a matter of time before sellers would be pressing things to the downside again.
Keep in mind that the selling pressure of last week has completely been recovered, so it is likely that the market is going to continue to try to go higher. If we can break above the 200 day EMA, then it is possible that the market goes looking towards the crucial $1830 level, which is where we had seen massive resistance as of late. The market continues to be very noisy, as we have a lot of movement in the greenback overall. Keep in mind that there is a huge negative correlation between the US dollar and gold, and as a result you need to keep an eye on both markets in general.
If we turn around a break down below the $1750 level, that would be extraordinarily negative, perhaps opening up a move down to the $1680 level. The $1680 level has been a huge support level, and an area we have bounced from at least three times. Breaking down below that would of course be a very negative sign, perhaps opening up gold for a move down to the $1500 level. That would more than likely accompany a spike in the US dollar, so keep an eye on both charts.
I think the one thing that you can probably count on is a lot of volatility, and therefore the choppy behavior is something that you need to pay attention to. The gold markets have seen one heck of a move, so that choppy volatility probably only continues. If we were to break above the $1830 level, that would be a very bullish sign, perhaps opening up a move towards the $1910 level, an area that of course has been very resistive over the longer term. Obviously, if we were to break above there then the entire trend will have changed.
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