As things stand right now, buying gold is essentially the same thing as shorting the US dollar, so you can also look at the currency markets to get that information as well.
The gold market has shot straight up in the air during the trading session on Thursday as we continue to see a lot of volatility. The market is likely to continue to see a lot of noisy behavior, as the CPI never came out lower than anticipated on Thursday. The 0.4% month-over-month number was less than the 0.6% number expected, therefore people are starting to think that perhaps the Federal Reserve could either slow down the rate of interest rate hikes or even pause. The Federal Reserve still must deal with the 7.7% year-over-year CPI number, and inflation is something that they are looking to get down to 2%. In other words, this is a market that probably gets faded.
I would not be jumping into this market right away to try to fade this trade, because quite frankly there is no signs that it’s going to slow down quite yet. What will be interesting to see is whether the world would be willing to hold gold heading into the weekend.
Buying Gold is Losing Money
- As things stand right now, buying gold is essentially the same thing as shorting the US dollar, so you can also look at the currency markets to get that information as well.
- If they are willing to be short of the US dollar heading into the weekend, then you probably have more momentum to the upside in the gold market given enough time.
- I do believe that you have a situation where a lot of people are really confused as to what to do, but in the short term, it seems like there is a bit of a panic and “FOMO” in the market.
It is a good way to lose money if you chase a market like this. At this point, it’s very likely that we will see a lot of people going back and forth in the short term, but with the 200-Day EMA sitting just above, I do think that there is a certain amount of technical resistance out there that people will pay close attention to. On the other hand, if we shoot through here, then the market could investigate the $1800 level. This is going to be all about the Federal Reserve and the US dollar.