- Gold markets have gone back and forth during the choppy Monday session as we continue to see a lot of hesitation at this point.
- This makes a certain amount of sense due to the fact that we had shot straight up in the air.
- We have a situation where we need to work off some of this excess momentum or pullback.
- I would prefer a pullback, but we will have to wait and see whether or not we get that.
Waiting for Support Levels
The $1880 level is an area that I’d be very interested in buying if we get some type of support level. If we continue to see the market drop, the uptrend line would be challenged. The 50-Day EMA comes into the picture as well, so all that being thrown together, I do think it’s only a matter of time before the buyers jump in. We could then see the attitude of the market change if we do break through all that, but right now, I just don’t see that happening. We would need to see a massive spike in the US dollar value, something that just doesn’t look like it’s in the cards right now. While the US dollar could strengthen, the reality is that there are a lot of people betting against it.
Furthermore, the gold markets have been used as a form of wealth preservation, and I think that will continue to be the case. At the very least, we may go back and forth in a sideways range, so I’m not willing to buy gold right now.
I am also not interested in shorting gold either. It’s obvious that we have made the decision as to which direction we want to go and it looks like the market is going to continue to think along those lines. It is likely that we need to pull back or at least pause a bit in order to attract more buyers. Longer-term, I do think that we go looking to the $2000 level, which of course is a large, round, psychologically significant figure that would attract a lot of headline attention. Breaking above there would also attract quite a bit of attention as well, but I don’t expect that to happen anytime soon. We have clearly seen the biggest part of the impulsive wave play itself out.