Gold initially fell hard at the open on Monday as traders reacted very poorly to the idea that the ceasefire in Islamabad wasn't built upon. This market is still a bullish longer-term scenario but will feature a ton of short-term noise.
Gold
Gold initially fell hard at the open on Monday as traders reacted very poorly to the idea that the ceasefire in Islamabad wasn't built upon. The agreement never came and therefore markets panicked almost immediately. Interest rates shot up in the United States on the 10-year, which is what I've been tracking, and that of course drives gold lower.
That being said, we have seen those interest rates give up some of that strength during the day and gold turned around. The $4,600 level is an area that I continue to watch very closely in this market as it has been both support and resistance multiple times and it does line up quite nicely with how the US 10-year yield is behaving.
Geopolitical Influence and Interest Rate Sensitivity
The 50-day EMA sits just above and that could be a little bit of a barrier, but I think breaking above there opens up the possibility of a bigger move to the $5,000 level. My suspicion is that we won't see a move to the $5,000 level unless of course we either look like we're getting ready to end the war or we actually do. That probably sends gold flying because it should send yields lower.
All things being equal, this remains a market that I am buying dips, but I also recognize that it only takes one tweet or one headline to throw everything into chaos as we have seen multiple times over the last several weeks. I remain structurally bullish, but I also remain pragmatic with my position sizing.