The gold market rallied on Tuesday as rates drifted a little lower in the United States. With this, the same correlations are playing out in the metals markets.
GOLD
The gold market rallied a bit during the trading session on Tuesday as we continue to see a lot of questions asked about the interest rate situation in America and of course whether or not the interest rates will remain very strong. At this point, we are at about 4.42% and that is generally going to be a headwind.
We did drift a little lower early in the session and that’s helped the gold market a bit, but we’ll just have to wait and see how this plays out. If we drop from here, the $4,400 level is an area that I'm very interested in. It’s a large round psychologically significant figure, an area that is supported and of course we have the 200-day EMA sitting right there as well.
TECHNICAL TARGETS AND GEOPOLITICAL FACTORS
To the upside, if we break out above the highs of the Monday session, then we could go looking to the 50-day EMA, but that needs rates to really start to drop and at this point in time, they’ve eased slightly, they just haven’t fallen apart.
All things being equal, this is a market that’s hanging around the bottom of a larger consolidation area and just simply waiting to see what comes out of the Middle East next. After all, there’s been a lot of nonsense to worry about and the next headline that sends rates spiking based on energy inflation concerns could really wallop the gold market. In that environment, it is paramount that you pay close attention to your position size, as we are likely to move on random news or headlines, more likely than not coming out of the Middle East.