During the trading session on Tuesday, gold markets fell slightly, pulling back from the psychologically significant $2000 level. While this is an area that many traders are keeping an eye on, it is not surprising that the gold market may slow down with the upcoming FOMC meeting on Wednesday.
It is essential to keep in mind that the gold market had been overbought, and even in a bullish trend, occasional pullbacks are necessary to attract more traders. Despite forming a red candlestick, many individuals are looking to get involved in gold, so if it becomes cheaper, a lot of “fear of missing out” (FOMO) trading could occur.
At this point in time, the $2000 level remains psychologically and structurally significant. If gold can break above the top of the shooting star from the Monday session, it is likely that it could go much higher and begin the next major bullish run. However, this will heavily depend on the outcome of the Federal Reserve's meeting. If we do leave the $2000 level in the rearview mirror, that could be a sign that we are ready to go much, much higher. At that point, $2500 would be reasonable over the longer term.
If Jerome Powell sounds suddenly dovish, it could send gold prices skyrocketing by reducing the value of the US dollar. Conversely, if he sounds exceptionally hawkish, it could temporarily hinder gold prices. It is essential to note that gold and the US dollar can rise simultaneously, as was seen during the 1980s, but it is generally a safety trade. Ultimately, whether or not traders will buy gold going forward will depend on psychology.
Traders Are Willing to Buy Gold
- Looking at the charts, it appears that traders are willing to buy gold, and pullbacks should be viewed as potential signs of support.
- However, it is crucial to keep in mind that the gold market can be volatile, especially during times of uncertainty such as the FOMC meeting.
- Therefore, it is essential to keep position size reasonable and remain vigilant.
Ultimately, the gold market fell slightly during the trading session on Tuesday, pulling back from the $2000 level. While this area remains significant, it is not surprising that the gold market may slow down with the upcoming FOMC meeting. Whether or not gold prices will rise going forward will heavily depend on the outcome of the meeting and trader psychology. It is crucial to keep position size reasonable and remain vigilant during potentially volatile times.
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