I like gold at the moment, but we need to see if the previous resistance is going to be held as support. This might be what Tuesday was all about.
Gold
The gold market has fallen quite a bit during the trading session on Tuesday as we are starting to see a little bit of giveback from the previous session. I also recognize that gold has broken out and has fallen to test potential support at the $5,150 region.
This was previous resistance so if we continue to see gold rally then I think this could be an area that buyers might jump back in. I do like the idea of buying gold in general, more of a buy on the dips type of setup as far as I can see, and I don't have any interest whatsoever in shorting the market.
Plenty of Momentum
I think the market has plenty of momentum behind it and given enough time probably takes off towards the $5,600 level. But the momentum that we have now is going to be much less than what we had before. After all, there was a very traumatic event two or three weeks ago now that a lot of traders may have been knocked out of the market completely.
I am sure there was mass liquidation out there. Central banks around the world continue to buy gold and I think there are plenty of geopolitical concerns that will be part of the factor as well.
With all of this being said, I do think you are trying to find cheap gold along the way with $5,000 perhaps offering a bit of a magnet price, maybe even a bit of a floor. We will just have to wait to see. Even if we broke down below there though, I think it is really not until we drop below $4,600 that you have to be concerned about the overall trend.
As things stand right now, we had a horrific sell-off, but from a technical analysis standpoint, we saw buyers jump back in right where you would expect them to.