- The gold market initially pulled back just a bit during the trading session on Tuesday, only to turn around and show signs of life.
- By doing so, the market looks as if it is going to do everything it can to reach the top of the larger consolidation area that we have been in since the early part of April.
- This means that we could target the $3500 level above, which is a large, round, psychologically significant figure, and therefore I think a lot of people will be paying close attention to it.
- If we were to break above there, it would obviously be a very bullish sign, and breaking above that level could unleash the next wave of buying pressure.
Technical Analysis
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The technical analysis for this market is obviously bullish from a longer-term standpoint, but you should also keep in mind that the market has been going nowhere over the last couple of months, as we have been stuck in a $300 range. The $300 range suggests that the market breaking out above the top of the range could open up a move to the $3800 level. The $3800 level of course would only be the beginning, assuming that all of the fundamentals still line up for the same type of scenario.
On the downside, if we were to break down below the 50 Day EMA, then the market could go looking to the $3200 level. The $3200 level is an area where a lot of people will be paying attention to, and I think a lot of value hunters would be willing to get into the market in order to take advantage of “cheap gold.”
All things being equal, I do like the idea of buying dips, which obviously a lot of traders have agreed with, as every time we have fallen there have been buyers willing to get involved. Ultimately, this is a market that I think has further to go but I also recognize this time of year is fairly quiet.
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