I am still looking at signs of exhaustion as selling opportunities, especially if we continue to see a lot of strength in the greenback, or if we get interest rates rising in America.
Gold markets did very little during the trading session on Labor Day as most liquidity in the United States was simply not there. Ultimately, this is a market that is trying to figure out whether it has just formed a double bottom, or if it is going to eventually break down. It’s worth noting that the $1680 level underneath has held as of now, but if we were to break down below that level is likely that we go much lower.
If we turn around and break above the $1725 level, we might have a little bit more of a rally, but the 50 Day EMA sits at the $1760 level and is falling. Because of this, I think the 50 Day EMA should be a bit of dynamic resistance, and I would be willing to short this market if we get signs of exhaustion in that general vicinity. If we break above it, then it’s possible that we could go looking to the $1800 level, as it was a significant resistance barrier previously, which was preceded by significant support. The 200 Day EMA sits just above there as well and is dropping.
Looking for Selling Opportunities
- It’s not until we break above the 200 Day EMA that we are likely to see a major trend change.
- With that being the case, I am still looking at signs of exhaustion as selling opportunities, especially if we continue to see a lot of strength in the greenback, or if we get interest rates rising in America.
- Both of those work against the value of gold, as it’s much cheaper to earn a real yield on a bond than it is to pay for the storage of a bunch of metal.
Either way, we could get a short-term bounce just since we are a little bit oversold. But it’s clear that when you look at the longer-term charge just how important this support level underneath is. So, if we were to break down below there, I would think the gold markets will see a big flush, perhaps down to the $1500 level rather quickly. On the other hand, if we do turn things around, then we may eventually go looking to the $2000 level which is the top of the larger consolidation area that we have been in for the last couple of years.