Gold markets pulled back to the crucial $1920 level on Wednesday, an area that has been important more than once. Because of this, it looks like we are going to test the previous consolidation area as potential support. That area being broken above was a very strong sign, and now that we have pulled back the way we have, we are in the midst of “retesting” this previous technical region.
With that being said, the buyers will likely return, but there is a little bit of relief in the market as it was suggested that the Ukrainians and the Russians would discuss a cease-fire, which could take the war premium out of gold. The gold markets have had multiple reasons to go higher, so even though tensions in Ukraine may be drifting a bit lower, the reality is that gold still has plenty of room to go to the upside.
If tensions start to pick up again in Ukraine or if the talks produce more bad news, the gold market may be one of the first places that traders go looking towards. Looking at this chart, it is likely that the markets will have a string of support all the way down to at least the $1880 level, which is an area that had previously been resistance. The markets continue to see a lot of volatility, and I think that is going to be the case going forward. Ultimately, gold is likely to go looking towards the $2000 level eventually, which is the next major round figure. It is worth noting that the $1950 level has caused a little bit of resistance, but at the end of the day there is no real significant reason to think it will hold. Buying the dips continues to be the way I look at the gold market.
