Gold markets have rallied rather significantly during the trading session on Thursday after initially plunging. Quite frankly, the recovery has been quite impressive, as we have formed a massive hammer now, and that should have a lot of people looking to get long. If we can break above the 50 day EMA on a daily close then I think we have a real shot at trying to fill that gap above, meaning that we could go looking towards the $1830 level.
That is not to say that it would be easy, but we may get a little bit of a boost if the US dollar gets clobbered after the jobs number on Friday. Keep in mind the full employment is one of the mandate for the Federal Reserve, so people will certainly be paying close attention to this economic announcement as a lot of people are questioning whether or not the Fed can continue its plans on tightening. Furthermore, tightening can happen in little bits and pieces, meaning that they do not necessarily have to go as far as they had once suggested.
Regardless of what happens during the day on Friday, I think you can probably count on a lot of choppy behavior. Because of the fact that gold is so highly influenced by the US dollar, we will have to pay attention to what is going on in the US Dollar Index, as well as the interest rate markets. This typically go wild after the jobs number, so it is going to be very difficult to put on a large position. However, if we do get that daily close above the 50 day EMA, I think it does suggest that we have more momentum coming as we head into the weekend. If that is going to be the case, then I am more than likely going to be a buyer at the open on Monday unless of course something changes from a fundamental or geopolitical standpoint over the weekend.
On the other hand, if we do turn around and crash through the $1780 level, that would be sufficiently bearish enough to have me looking at the possibility of shorting and aiming towards the $1750 level underneath. The market breaking down below there could send gold into a bit of a tailspin, something that I do not necessarily expect to see.
