The gold market initially tried to rally on Monday to reach towards the $1790 level. The 50 day EMA sits just above there, and then the 200 day EMA after that. The 50 day EMA did just cross below the 200 day EMA, so it looks as if we are ready to try to roll over from a longer-term standpoint, and the fact that we gave up the gains for the day rather easily suggests that we will continue to see selling pressure.
If we were to break down below the bottom of the candlestick during the trading session on Monday, then the market could go looking towards the $1775 level. Over the last couple weeks, we have been respecting a relatively tight range, and there was nothing on the chart during the day that suggests we are ready to get out of it. That being said, short-term traders will continue to like the market, because we are going to go back and forth without any type of directionality until something changes.
The one thing that could change might be the Federal Reserve and its attitude after the meeting that is going on this week. At this point, it will come down to what they are going to do with bond purchase tapering, and it will be interesting to see how the market reacts to Jerome Powell at the end of the Wednesday session. Furthermore, you will see a lot of movement due to the US dollar bouncing around in reaction as well.
Currently, the world is starting to have the argument as to whether or not inflation is transitory or not, and the gold markets will be greatly influenced by that. I think you can anticipate a lot of noisy behavior and it is likely that we will see this market continue the same type of rounding pattern, but nothing that is overly impressive at this point. The later we get in the month, the more likely we are to see the market do even less. If we do have a sudden move, it could be exacerbated by a lack of liquidity, so keep that in mind. Although I think we will simply go back and forth in the short term, I do not want to put a huge amount of money into the market because of the fear of a sudden spike.
