Gold Forecast: Continues to Pull Back After Massive Run Higher

• The Gold market started with a rally during Monday's trading session, but it gave back the gains and showed signs of weakness again.
• Currently, the market is during a rising wedge, and if it breaks down below the uptrend line, it's possible that it could go down to the $1950 level.
• However, there are a couple of other things going on that could come into the picture as well.

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Firstly, in the futures market, there is a gap that has yet to be filled, and secondly, the 50-Day EMA is in the same area. These factors tie together nicely, and it's possible that the market will move down to that level. Although there will be noise about the gold market breaking down below the $2000 level, it's just another level, and the only difference is that there will be a little bit of psychology attached to it. However, it's essential to pay attention to the fact that the market has formed a bit of an inverted hammer, and that, in and of itself, will attract a lot of attention.

While gold is expected to strengthen over the longer term, it has run rather quickly to the upside, and therefore, it could offer value soon. However, traders need to see some type of supportive action after the market falls. Patience will be necessary to find the value and make a nice value-based trade. It's not recommended to chase the trade, as it could lead to being stuck in the market.

Pay Attention to Economic and Political Factors

Although the market may continue to pull back in the short term, it's not recommended to short gold. Profit-taking after a nice trade is expected, and it's essential to wait for the right opportunity to present itself. Gold is a market that is highly sensitive to economic and political factors, and it's essential to pay attention to these factors when making trading decisions.

At the end of the day, the gold market is currently in a rising wedge, and if it breaks down, it could go down to the $1950 level. However, there are other factors at play, such as the gap in the futures market and the 50-Day EMA, which tie together nicely. Traders need to exercise patience and wait for the right opportunity to present itself, rather than chasing the trade. While profit-taking is expected after a nice trade, it's not recommended to short gold, as it's a market that is highly sensitive to economic and political factors.

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