Gold continues to move on interest rates, noise from the headlines, and simple momentum.
Gold
Gold continues to be very noisy on Wednesday, perhaps giving back some of the gains just due to pure exhaustion. It will be interesting to watch how this plays out because this is all about the bond market more than anything else. Bonds have seen rates drop over the last couple of days and that of course has helped gold with the idea that perhaps there is real chances of peace being reached in the Middle East; it of course has people optimistic in general.
That will drive rates down. Gold of course has moved counter to this, but today we find ourselves maybe just a little tired. That's fine; it's typical in an uptrend. We are sitting just above the crucial 50-day EMA. That is an area that a lot of people will be watching for signs of how the trend is playing out.
If we can continue to go to the upside, perhaps seeing interest rates drop a bit in the United States, that opens up the possibility of gold trading to the $5,000 level, which I think is a very real possibility right now and something that I would anticipate seeing sooner or later. If we fall from here, the $4,600 level is an area I'll be watching very closely as it has been important multiple times in the past. Anything below that level then I start to get a little bit concerned.
Long-Term Outlook and Central Bank Influence
Nonetheless, this is a market that I believe that long term probably continues to have plenty of buyers willing to get involved and I do think that there are multitudes of reasons to think that gold continues higher over the longer term.
It won't be the fear trade that a lot of people associate with it; it probably has more to do with rates dropping worldwide and of course the idea of maybe, just maybe, central banks around the world will eventually come around to printing more money in about 6 months.