- Gold markets have been somewhat positive in the then the Monday trading session, as spot gold traded higher.
- Keep in mind that most of the liquidity was gone, so you cannot read too much into the market.
- I think that at this point we are probably looking at this through the prism of a market that’s going to have to either pull back to find buyers or get another fundamental reason to get moving. We may not get that actual fundamental reason until Friday.
If we do pull back, the first support level will be the uptrend line, followed very quickly by the $1800 level. After that, we have the 50-Day EMA getting ready to cross the 200-Day EMA, or the so-called “golden cross.” This of course attracts a lot of longer-term “buy-and-hold” types of investors, so that might be worth paying attention to. Furthermore, the area also should offer a significant amount of support if we were to pull back toward those moving averages, but I think at this point we will have to wait and see how the US dollar behaves.
Looking for Signs of Support
The negative technical setup is that we are forming a bit of a rising wage, so the idea of dropping down to the bottom of that wedge and reaching the $1750 level is not completely out of the question, but we also need to think whether there’s a real reason for that to happen. Beyond exhaustion, I don’t really see a situation where we are more likely than not going to break down, but we will have to wait and see. The market will of course be very thin between now and the jobs number on Friday but given enough time I think we will eventually have more of a true move.
Because of this, the market is likely to see a lot of momentum once all the traders come back to the markets as they returned from the holidays. With this, I think we continue to see buyers eventually, but short-term pullback should continue to offer value given enough time. I am looking for signs of support after a pullback and some type of bounds. However, if we clear those moving averages below, we could struggle.
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