Gold markets rallied a bit on Wednesday as we continue to see this market grind back and forth. That being said, the market is more likely than not going to continue to be a scenario where buyers are going to be short-lived, as the US dollar is without a doubt the big winner as of late. The markets will continue to be very noisy, but ultimately, I do think that all of the noise above will continue to be a major issue for traders to overcome.
Gold markets have been pummeled by the US dollar’s strength, and it is worth noting that we stopped right at the 200-day EMA and the futures market. This is an area where you would expect a lot of technical selling, so be interesting to see whether or not we can continue to go higher. If we do, there are plenty of areas above that could come into the picture to cause problems. The most obvious place for me is going to be the $1883 level, where we had fallen from previously. That was an area that had seen a lot of downward pressure and sent the market down to its current levels. One would have to assume that there is a certain amount of market memory in that area, so I do think we probably have quite a few traders waiting to get involved at that level.
The market continues to be a situation where traders are willing to fade the rally, especially as the US dollar continues to be very strong. As long as that correlation still remains, it is difficult to imagine a scenario where I would get long in this market, especially as the 50-day EMA sits at the $1906 level and is sloping lower. I will be looking for signs of exhaustion that I can take advantage of. The market will continue to be very noisy, but that is not a huge surprise considering the CPI came out so hot during the day, and the Federal Reserve is most certainly in play. That being said, let the market rally a bit and then start looking for signs to get short. If we do break down below the lows of the session for Wednesday, it is very likely that we could go looking to reach the $1800 level.
