The only thing you can do at this point is to keep your position size relatively small, and only add to your position when you get confirmation of your trade.
The gold markets fell a bit on Tuesday to dip below the 200-Day EMA. By doing so, it suggested that we could break down. However, we have turned right back around to show signs of life and support.
Doing so suggests that the market might be getting ready to bounce, but there is a lot of work to go. The gold markets were beaten rather hard by the US dollar, and I think this could very well continue to be an issue. That being said, the gold market is a little oversold and we are sitting in an area that previously had been resistance, which you would suspect to be potential support. With this, I think the market will continue to be very noisy, but it certainly looks as if a short-term bounce could be coming. Keep in mind also that the FOMC meeting is going on, meaning that there should be an interest rate decision, monetary policy statement, and then a press conference coming from the Federal Reserve. This will have a massive influence on the US dollar.
If we were to break down below the lows of the trading session on Tuesday, that could open up a move down to the $1800 level. The $1800 level is a large, round, psychologically significant figure, and is also an area where we have seen quite a bit of buying in the past. If that were to be broken through to the downside, it is very likely the gold will collapse at that point.
On the other hand, if we were to turn around and take out the 50-day EMA on a daily close, the market likely will go much higher. I don't think that we will necessarily do that, but I do think that a short-term bounce does make sense. If we did take out the 50-day EMA, that would probably bring in quite a bit of momentum buying as well, so I think it is only a matter of time before we continue to see massive volatility. The only thing you can do at this point is to keep your position size relatively small, and only add to your position when you get confirmation of your trade.