The $5,000 level is looming large at this point in time, as the rally on Friday has been rather impressive to say the least.
Gold Futures
The gold market initially fell during trading on Friday but then turned around to show signs of life as we head into the weekend. We are threatening the $5,000 level. The $5,000 level is a large round psychologically significant figure that a lot of people will be watching very closely.
Because of this, I think you've got a situation where this will determine where the next couple of $100 comes from. Quite frankly, this is avery wild market at the moment, and I think that will continue to be the case going forward.
Long-Term Trajectory and Near-Term Volatility
Ultimately, I do believe that gold goes higher over the longer term, but you have to be very cautious about getting aggressive here, mainly due to the fact that we continue to see a lot of really noisy and dangerous behavior.
Because of this, I anticipate that market participants will continue to look at this through the eye of a question about where we go next, perhaps whether or not we have the momentum to truly take off to the upside or if we are essentially stuck here.
I can make a very serious argument to the effect that we are in the process of trying to recover from what had been a horrific sell-off and at the end of the day, I believe that the main drivers that have been pushing gold higher are very much still intact.
With that being the case, I think we go much higher, but this occasional pullback and volatility is necessary to make this a viable market. You simply cannot go straight up in the air forever and eventually gravity comes back. I like buying dips all the way down to the $4,800 level in the short term.
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