- Gold markets rallied again on Friday as we have seen a significant bounce from the crucial $1680 level.
- This is an area that is important on longer-term charts, so it does make sense that we would see this bounce come into play.
- It is worth noting that some of the gains were given back late in the day to form a bit of a shooting star.
Watch the Federal Reserve
It is because of this that you need to pay close attention to how the market behaves over the next couple of days. This does make a certain amount of sense because the Federal Reserve meeting on Wednesday could have a lot to say as to where the market is going longer-term. The Federal Reserve is anticipated to be hawkish, but there has been a lot of back-and-forth when it comes to the amount that they are willing to go. Some people believe it is 75 basis points, but others believe that it is 100. Because of this, it’s likely that we will continue to see a lot of confusion and it’s probably worth noting that the Wednesday session could be quite noisy.
The next couple of days heading into it could be difficult as well, so it’s worth noting that you are probably better served by not putting too much into the market over the next couple of days. After all, interest rates will be all over the place, just as the US dollar will be. Both of those have a major influence on what happens next with the gold market, as the bullion market is so sensitive to both.
If we can break above the $1750 level, it’s possible that we could see the market continue to go higher. At that point, I would anticipate a potential move to the $1800 level where there’s a lot of confluence. The confluence is not only the large, round, psychologically significant figure, but it is also the previous uptrend line, and now the 50-day EMA. With all that being said, if we do break higher, it is probably still somewhat limited. On the other hand, if we were to break down below the $1680 level, gold is more likely than not going to get hammered, perhaps dropping all the way down to the $1500 level. That being said, the Federal Reserve will probably be the catalyst one way or the other.
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