Keep your position size reasonable, and only add once the trade starts to work out for you.
Gold markets rallied significantly on Friday as traders reacted to the jobs number being weaker than anticipated. That being said, the market is likely to see the area just above as significant resistance, especially as there is the previous trendline, and all of the noise that sits just below the crucial $1800 level. Furthermore, the 200-day EMA sits at the $1800 level, and that will attract a lot of attention. The market is likely to continue to see a lot of noisy behavior, but I think any signs of exhaustion in this general vicinity will probably be jumped on. Gold has been absolutely eviscerated as of late, and I think that will continue to be the case.
Yields did drop just a bit as traders looked at the possibility of tapering as losing a bit of likelihood with the jobs number missing the way it has. That being said, I think that the market will more than likely have a completely different look next week, so I am waiting to see whether or not we rally from here and find sellers, so that we can start shorting from here. To the downside, the $1755 level has offered support, so as long as we can stay above there, I think we have a chance of at least fighting sideways. If we were to break down below that level, then I think gold starts to fall apart, perhaps reaching down towards the $1725 level.
Pay attention to the US dollar, because it does have a bit of an inverse correlation to the gold markets. This is a market that will continue to be very noisy, but I do believe that the recent breakdown and the potential “death cross” that we are forming is something that a lot of people will be paying attention to. The wicks at the top of several candlesticks in a row also suggest that the sellers are still above waiting to get aggressive on any chance. The market will continue to be noisy, but that is the case most of the time for gold anyway. Keep your position size reasonable, and only add once the trade starts to work out for you. If we were to break out above those wicks, then I think the market would go looking towards the $1870 level.