Volatility will continue to be an issue, so make sure that you keep the overall position size reasonable, because the volatility could cause you quite a bit of noise.
Gold markets rallied significantly on Wednesday as we continue to see a lot of bullish momentum. Ultimately, I think this is a market that will eventually try to find a reason to go much higher, especially as the $1880 level above had offered so much in the way of resistance. If we can break above that level, then it is likely we will go looking towards the $1900 level. That is a large, round, psychologically significant figure, and I think a lot of people would be looking to take profit in that area. Any move above the $1900 level will more than likely offer a “buy-and-hold” type of situation.
Underneath, the 50-day EMA offers support, as it is turning around to break above the top of the 200-day EMA, forming the so-called “golden cross.” That being said, that is the signal that a lot of longer-term traders will pay close attention to, as the investing public tends to look at that as a “buy-and-hold” signal. Ultimately, this is a market that I have no interest in shorting anytime soon, but if we did break down below the $1835 level, then it is likely that we would see the market crash towards those moving averages. As things stand right now though, it certainly looks as if the gold market is trying to form a bullish flag, and that suggests that we have much further to go to the upside.
Gold will move in relation to the interest rates in America, and if they start to spike again, that could be the one thing to really bring down the value of this market. Nonetheless, the bullish flag does at least in theory measure for a move towards the $2000 region. This would make sense, and now it looks as if the overall trend is almost certainly trying to change for a bigger move. Volatility will continue to be an issue, so make sure that you keep the overall position size reasonable, because the volatility could cause you quite a bit of noise. That being said, I think you will continue to go sideways in the next couple of days, but clearly a move above the $1880 level would be strong.