- Gold markets rallied a bit during the trading session on Friday but continues to see the $1680 level as an interesting resistance barrier, and of course hold off from that level.
- Ultimately, this is a market that’s in a downtrend, and you should pay close attention to the fact that we could not hang on to gains during the session.
- Ultimately, this is a market that I think given enough time will continue to drift lower, perhaps reaching the lows again. If the interest rates continue to spike or if the US dollar continues to rally, it’s likely that we will continue to see gold drift lower.
Underneath, the $1600 level will be important, and I think that it is likely that we will see that area offer a bit of a fight, but if we were to break down below there, then it’s likely that we could go to the $1500 level. The $1500 level is a large, round, psychologically significant figure, and therefore a lot of people will be paying close attention to that as well.
Looking to Short Gold
The market breaking above the $1700 level would be a very bullish turn of events, but I just don’t see how the market does pick up that kind of momentum without the US dollar falling apart. I don’t think that happens, especially as the geopolitical issues out there continue to cause major issues. I think at this point, the market is likely to continue to see the US dollar bash the brains out of all assets, not just gold. The 50-Day EMA is just above that $1700 level and is dropping rather rapidly. Because of this, I think it’s only a matter of time before we see that offer resistance as well. If we were to break above there, then again, that might be a bullish sign, but we would need to see some type of shift in the overall attitude of multiple issues, not just the US dollar, but also the Federal Reserve.
The Federal Reserve is going to continue to do everything you can to fight inflation, which means that interest rates will continue to climb. As long as that’s the case, gold is an asset that I’m willing to short, because I think eventually, we will build a basing pattern that we consider buying, but that will go along with the shift in the attitude from the Federal Reserve.
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