Gold Forecast: Continues to Threaten the $1800 Region

• The gold market has rallied a bit during the trading session on Friday, as we continue the threaten the crucial $1800 level.
• It’s possible that I may have to look at this through the prism of a very choppy and noisy market, as we see gold threatening the upside, but seemingly not able to get above there for any significant amount of time.
• Ultimately, I think at this point you must look at this through the prism of interest rates more than anything else because they have been dropping and that has helped the gold market.

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The US dollar can rise right along with gold, in times of recession and other such markets. At this point, we are heading towards a recession, so I think it’s probably a situation where we may see both go higher over the longer term. In the short term, it looks like gold is running into major resistance, and of course, the markets are waiting for the Federal Reserve meeting next week on Wednesday to decide what to do about the greenback longer term. It looks as if we are going to see a 50-basis point rate hike and of course hawkish behavior. The question is how long will they be?

Choppiness Ahead

I pull back at this point, the 200-Day EMA $1763 level, and could offer a lot of support. Ultimately, I think we are trying to form a short-term range, and therefore we could see a lot of choppiness between now and that Federal Reserve meeting. Ultimately, this is a situation where you think you have a lot of noisy behavior on short-term charts, but it certainly favors the upside. I think it’s more of a “buy on the dips” type of situation, although I would not get too big with my position sizing as the markets have been so loud.

However, if we take out the $1820 level, that will tell us that the gold market has made up its mind, and it’s going to go another $50 to the upside. Ultimately, this is a situation where we don’t really have a shorting opportunity until we get below the 200-Day EMA, or if the Federal Reserve explicitly gets aggressive, which is possible considering that inflation is so persistent in the United States.

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