- Gold markets have rallied a bit during the trading session on Thursday again, as we continue to see quite a bit of aggressive buying on each dip.
- We have a shot straight up in the air for a while, so now I think we need to either go sideways and grind quite a bit of the excess froth away.
- Quite frankly, I would rather see this market pull back and offer value, but right now it does not look like it’s ready to do so.
On a pullback, the $1850 level would be ideal, because it would send us basically down to the uptrend line that I’ve marked on the chart. I would like to see the market drop down to that area and then bounce a bit, so I can pick a “cheap gold” in what is obviously a very bullish trend. Quite frankly, gold has not given us much of a chance to enter recently, because each pullback is so shallow.
Trying to get to the 2000 Level
I don’t like buying gold after running like this, but I would start to reassess things if we do get a couple of weeks going sideways. For what it is worth, silver looks very much like consolidation as well, so I think you’ve got a situation where the market will continue to see the player buyers on dips, but if we were to break out to the upside then we could start looking at the next major figure, which is at the $2000 level.
As long as we can stay above the uptrend line that I have marked on the chart, I don’t have any interest in shorting. The “golden cross” has recently happened, and a lot of people will take a look at that as a longer-term “buy-and-hold signal.” I don’t necessarily like the idea of following the “golden cross” just willy-nilly, but it would have worked this time. This is because the indicator does tend to take its time getting here, and therefore is not necessarily a situation where it is typically useful from a short-term perspective. All things being equal, the market is likely to be a scenario where we have a lot of noise, but I think at this point in time traders are trying to do everything they can to get to that $2000 level.
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