Until the Federal Reserve changes its overall attitude, I just don’t see where the gold market rallies for any significant amount of time.
- Gold markets rallied at the beginning of the session on Tuesday but gave up gains yet again as it looks like we are going much lower.
- This is a market that I think is going to continue to struggle overall, and if that’s going to be the case, I like fading rallies just as we had seen it happen during the session on Tuesday.
- The US dollar continues to be very strong, and that does work against the value of gold, plus it is more important to pay attention to the interest rates, because if the interest rates continue to rise, then it works against the value of gold.
The $1680 level underneath was a previous support level, and now it should offer quite a bit of resistance. Short-term rallies that show signs of exhaustion will be sold into, with the $1680 level as the ceiling in the downturn. Until the Federal Reserve changes its overall attitude, I just don’t see where the gold market rallies for any significant amount of time. At this point, the $1600 level is almost certainly going to get targeted rather quickly, and then after that we would look at the $1500 level.
Look for Opportunities to Short this Market
The $1500 level is an area where we would see a lot of noisy behavior, and I think now there are a certain number of buyers who will come in based upon the size of the figure, and the idea of gold being oversold. Regardless, I think every time we rally now, you look to start shorting this market, and if we can break down below the $1500 level, then it’s likely that the market could go down to the $1200 level underneath.
The $1200 level is a level that a lot of people will pay close attention to since it is where the massive move higher started. I think there could be a lot of accumulation in that area, but it’s likely that we would see a potential turnaround in that area, but ultimately this is a region that I think a lot of people would be looking to accumulate, so it doesn’t necessarily mean that it would take off to the upside. As far as buying is concerned, we need to see the Fed change its attitude, which is something that isn’t going to happen anytime soon.