Gold continues to see a lot of headwinds on rallies, but a lack of volume is the real issue.
Gold
Gold initially took off to the upside during the trading session on Friday, but as soon as Americans came on board, they crushed it again. At this point in time, it looks like a market that just does not have the momentum to go anywhere in the short term. But I would not read too much into it, mainly due to the fact that the volume is going to be very thin.
Most traders will be away from their desks today instead of pressing buttons, and, quite frankly, most retail traders could take a lesson from that. Institutions will be back online on Monday and then start to ramp up as we go towards the jobs report. After that, you start to see something along the lines of normalcy. The next couple of trading sessions will still be a little bit thin, but as we move forward, it will get better and better.
The Outlook for Gold
It is not like an on-off switch, and therefore, you have to keep in mind that these moves do not really mean much, at least not at the moment. If we can get a daily close above the 4,400 level, that is what I am looking for in order to start thinking about getting long again.
In the meantime, short-term dips should offer buying opportunities. Quite frankly, the market is overdone. I understand that I think pretty much everybody knows that, especially when you start talking about precious metals in general. But that does not mean that the trend is changing. In fact, it just means that a little bit of sideways action or even a pullback is quite healthy in an environment that has seen such massive gains.
Based on the ascending triangle that we broke out of and are testing the top of again, in theory, we should go to roughly 4,900. I do not think that is an outrageous claim; I just do not think it happens overnight. The massive run-up is probably going to have to settle down a bit before we see any type of real momentum, and I think that is exactly what is playing out here.
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