The gold market has rallied a bit during the early hours on Thursday and now looks as if it is trying to break above the 50-day EMA.
All things being equal, you need to be cautious here because Friday is the non-farm payroll announcements in the United States and that will have a major influence on where we go next.
At this point, I think eventually gold will try to get to $4,900, but we also have to pay close attention to the 10-year yield in the United States because as it falls, that tends to help gold and when interest rates rise, it tends to hurt it.
Interest Rates and Federal Reserve Policy
Keep in mind that with the employment numbers coming out on Friday, if employment in the United States is still really strong, you might see rates start to rally due to the fact that people will start to price in the idea that the Federal Reserve has to stay tighter for longer. That would cause some issues.
Nonetheless, it's interesting to see that we had bounced from the $4,600 level, which is an area that's been important multiple times. If we can continue to go higher, then $4,900 followed by $5,000 could be your target.
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Don't get me wrong, I do believe in the longer-term prospects for gold, but we still have a very fragile idea of some kind of peace coming out of Iran and the United States and therefore it only takes one errant tweet to get things flying to the downside or to the upside. We'll just have to wait and see. I overall like the idea of buying dips but watch that 10-year yield and make sure that rates are not rising too quickly.
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