Gold markets have drifted lower during the majority of June, as we continue to fall in the face of higher interest rates. That will continue to be the major correlation during the month of July, with interest rates and gold in a negative fashion. Rising interest rates pays traders to sit on bonds instead of taking on the risk of holding physical gold. Nonetheless, there are a couple of factors worth paying attention to from a technical analysis standpoint as I look at the chart.
The 50-Week EMA sets up just below the $1900 level, an area that obviously has a lot of psychological importance attached to it. With that being the case, I think you’ve got to look at this through the prism of perhaps trying to find a little bit of support in this area. Furthermore, you could also make an argument that the 38.2% Fibonacci or to level sitting right around that general vicinity could also come into the picture. If this does not hold, then it would be a very ugly look for gold, as we could drop down to the $1800 level. The $1800 level course is a major round figure and therefore it does make quite a bit of sense that we would see a little bit of noise in that general vicinity. If we were to break down below there, it would be lights out for the gold market. However, I don’t think we break down below there during the month of July.
The other side of the equation is that we get some type of bounce, and as I write this during the end of the month of June, we are most certainly at a major inflection point.
- If we turn around and recapture the $1950 level, then it’s possible that we could go looking to the $2000 level which has a lot of psychology attached to it also.
- I do think that if we bounce and recapture the $1950 level, then it’s likely that we go higher to retest that high price that we just made a few months ago.
- It’s worth noting that the area just below the $2100 level has now been tested 3 different times over the last several years, and so far it has held as major resistance.
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