Gold markets fell rather hard Wednesday as we continue to see a lot of trouble near the 200-day EMA. Ultimately, this is a market that has been selling off quite drastically, and at this point, it looks as if we are trying to find buyers underneath. This is a market that is going to be influenced by a lot of external problems.
For example, the interest rate markets in America will have a huge influence on what happens, and if interest rates continue to rise significantly, that is going to put downward pressure on gold. Alternately, if the interest rates in America start to sell off, then it is likely that gold will rally. Nonetheless, there are a lot of different things to pay attention to when it comes down to the gold market right now.
The technical analysis is most certainly worth paying attention to as well, as it looks like we have tried to rally quite significantly over the last week or so. However, this pullback does make sense as you would not anticipate that the market was suddenly going to take off to the upside. This has been a nice move higher, but at this point, it’s likely that we would see some type of pullback to look for more buyers.
It’s worth noting that the bond markets are starting to pick up a little bit, driving yields down. If we can continue to see that happen, then the gold market gets a bid. On the other hand, if we see the bond markets continue to attract buyers, that will drive down the price of gold as the yield for holding paper will be much more worthwhile.
There is a lot of risk out there right now, so there is a certain amount of demand for gold based upon that alone. Nonetheless, I think you should expect a significant amount of volatility, especially if we are going to see a potential trend change. Because of this, the one thing that you should do is keep an eye on your position size as it will almost certainly cause problems. It’s worth noting that the $1870 level has offered resistance of the last 48 hours, so if we break above there, then we could go higher.
