- The Gold price is all over the place during the trading session on Wednesday, as it had tried to test the recent highs, but gave up a lot to gain as the US dollar suddenly found strength again.
- By doing so, the market looks as if it is running out of momentum, which is a good sign for a more sustainable trend.
- This is not to say that I’d be looking to short the market, just that I would like to see more of a selloff in order to pick up gold had a better price.
Volatility Ahead
All of the reasons for gold to rally still exist, but quite frankly we had gotten ahead of ourselves recently. Because of this, it makes a certain amount of sense that people would be willing to take profit out of the market at the first signs of volatility, just as it makes quite a bit of sense that people will be underneath and waiting for opportunities at lower prices.
The previous uptrend line has been left in the dust, so we could drop another $60 without changing the overall trend. Granted, I don’t want to see that happen in one day but I would like to see a couple of red candlesticks on the daily chart follow what has just happened, to offer enough value to feel like I should be involved. Longer-term, gold still more likely than not wind up going to the $2000 level, but it shouldn’t get there overnight. Quite frankly, I don’t wanted to because I would prefer to be involved in a trend that has a lot more wherewithal.
In a parabolic move like we had in the last couple of weeks, you quite often see massive selloffs. However, we can also simply go back and forth and grind in more of a flag -like pattern, which would eventually be bullish as well. Because of this, I think there are no real selling opportunities, unless of course something changes from a fundamental standpoint, which I just don’t see happening anytime soon. There are a lot of people out there worried about preserving their wealth, and of course gold is one of the favorite ways to do so. Because of this, I think gold does have quite a bit of upward momentum over the longer-term but needs to take a bit of a breather.
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