- As you can see, the gold market has been all over the place during the trading session here on Thursday, which makes a certain amount of sense considering that we have had a peace accord or a peace agreement in Gaza appear.
- And that has a little bit more of a risk on type of situation. But the reality is that the market has gone straight up in the air over the last couple of months and going straight up in the air can only last so long.
- I think we are desperately in need of a pullback. If we were to break down below the $4,000 level, it could open up a pullback towards the $3,900 level, possibly even the $3,800 level.
The $3,800 level is an area that was the target after this ascending triangle was broken, so I would assume that there is going to be a little bit of market memory in that area if we do pull back. Alternatively, we may just simply pull back in this area and test for a thousand for some type of short-term floor, maybe go sideways. Either way, I think this is a good turn of events because you just can't be parabolic for very long. Eventually you run out of momentum.
Volume is still pretty strong, so that does help. And I don't necessarily think that we are anywhere near seeing the trend change. So, with that being said, I think you've got a situation where you are looking for value on pullbacks, and you will get them from time to time. What I'm looking for is a drop and then a bounce in order to form a bit of a V pattern. And I will jump in on the right side of that V pattern.
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Longer term, I'm not sure where we will go, but clearly higher is still more likely than not. I don't have a price target because to be honest with you, just a couple of weeks ago, I thought $4,000 was realistic, but I didn't expect it to be in seven days or whatever. I expected it to be much later in the year by the time we got there.
So, keep in mind a little overextended and a 50 % Fibonacci retracement level could send this market even if you just did it from the breakout, you could be looking at a move down to $3,790. And I wouldn’t bat an eye; I would assume that it's just a normal correction. So, it is dangerous to chase the market at this level.
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