- Gold markets have rallied a bit during the session on Thursday as we continue to see markets move toward the crucial $1800 level.
- We had seen a lot of selling previously when we got there, so it is worth noting that it might be a bit difficult to get beyond that level.
- If we do, that opens the possibility of a move to the $1825 level. After that, then we could be looking at a move to the $1875 level.
Having said all of that, you must keep in mind that next week features the Federal Reserve announcement, which although is anticipated to be a 50-basis point height, the real question will be whether they sound like they are going to remain extraordinarily tight with monetary policy. Furthermore, gold is being driven by the idea of a recession, and in that environment, you may have a situation where both the US dollar and gold rally at the same time. Furthermore, Friday features the CPI figures coming out of the United States, so that is going to be a blip along the way as well. I think that the most likely moves will be a grind to the upside based on futures markets, as opposed to the spot market which is still struggling with $1800. The futures markets are already breaking through that region.
There’s a lot of Work Ahead
On a pullback, it’s possible that the 200-Day EMA offers a bit of a floor, currently sitting near the $1762 level. Anything below them could trigger further selling, but we would need to see interest rates start to rise again, and perhaps even a massive spike in the value of the greenback. (Again, despite what you’ve been told, the US dollar and gold can both rally at the same time under the right conditions.)
Ultimately, looks like we are trying to take out a major resistance barrier, and that normally means that there’s a lot of work ahead. That might be what we are witnessing right now, but it is worth noting that the Monday candlestick was terrific as far as negativity is concerned so I think there is still a lot of trouble just above, and therefore we need to approach the market through that prism. If we can clear the resistance above, we could be looking at a move to $2000.
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