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Gold Forecast: Continues to See Noisy Behavior

  • I have seen quite a bit of negative pressure, but I also recognize that there's a lot of support underneath.
  • I am looking at this as a potential buying opportunity.
  • We have broken down significantly to wipe out the gains from Friday, but that doesn't necessarily change anything.

When you look at the pair of gold versus the US dollar, you can see that the $2,300 level underneath has been a very significant floor, while the $2,400 level above has been significant resistance. We are essentially in the middle of that at the end of the day. So, I like the idea of buying gold on a dip. Several central banks around the world will continue to like gold as they continue to load up on it.

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    Massive Debts Continue to Be an Issue

    After all, economies around the world are going into massive debt, and that of course drives up the demand for hard assets. The US dollar, if it strengthens, could work against gold for a moment, but in that environment, I just simply buy gold against another currency. It doesn't have to be against the US dollar, maybe it's against the yen. That's been a supercharged trade as of late, and I don’t see that happening anytime soon as the markets are going to be noisy, but ultimately will see plenty of buyers willing to put money to work.

    Gold Forecast Today 09/7: Sees Noisy Behavior (graph)

    Underneath, we have not only the $2,300 level as support, but we also have that as a support region. I think it extends down to the $2,280 level. And as long as we can stay above there, I think we've got a real shot at continued consolidation and then eventually a breakout well above the recent highs and perhaps to the $2,500 level. Even on a breakdown below the $2,280 level, the 200 day EMA comes in as support and that should be a bit of a floor for people coming in and picking up cheap gold.

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    Christopher Lewis
    About Christopher Lewis

    Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.


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