Gold Forecast: Gold Continues to Sit at the Support Level

• Gold markets have done very little during the trading session on Wednesday as we continue to hang around the 38.2% Fibonacci level, an area that has attracted a certain amount of support over the last couple of days.
• It’s probably worth noting that we are right at where we had seen previous resistance, so therefore “market memory” comes into play.
• We are also between the 50-Day EMA and the 200-Day EMA indicators, which quite often will cause a bit of a squeeze.

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Will the Gold Market Resume Its Uptrend?

At this point, we can turn around a break above the 50-Day EMA, then I think gold has a real shot at resuming its uptrend. That being said, you need to be cautious with the $1900 level as it is an area where we’ve seen a lot of selling pressure in the past, as we formed multiple inverted hammers in a row. Because of this, I would anticipate that getting above $1900 will be difficult, but it’s not necessarily impossible. It’s also worth noting that we sold off quite drastically ahead of making those inverted hammers, with 2 massive red candlesticks. In other words, if we do start to take off, it is a situation where the process of going higher would probably be slow and painful.

On the other hand, if we break down below the bottom of the hammer from last Friday, then we could see this market go down to the 200-Day EMA, which is hanging around the $1800 level. The $1800 level of course is a large, round, psychologically significant figure, and an area where a lot of people will be paying attention to. You should also be aware the fact that the Federal Market Open Committee Meeting Minutes came out late in the day, and that will have people betting on what the Federal Reserve does next. That obviously will have an influence on gold as it will have an influence on the US dollar and interest rates. Because of this, it could be a very quiet day as we hang around and try to figure out what the Fed is going next, followed by a lot of volatility. The longer-term trend is still to the upside so I think this remains more or less a “buy on the dips” type of situation that people will flock to.

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