The gold market gapped lower at the open on Monday to show signs of weakness, as traders reacted to the tension between the US and Iran via the media over the weekend. However, we have turned things around since.
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The gold market gapped lower to kick off the trading week but turned around to bounce and show signs of life. Ultimately, this is a market that I think, given enough time, we have a situation where we have to make a bigger decision.
Initially, we reacted poorly to the comments coming out of the Middle East talks, but since then, we've seen the Iranians agree to nuclear inspection. So, if that actually is true, then that's a pretty big move in the right direction. All things being equal, the market looks as if it is trying to consolidate between the 200-day EMA above and the $4,000 level below.
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I do think you're probably going to see a little bit of negativity, but the $4,000 level is an area that I think you need to watch very closely. The $4,000 level being broken to the downside could send this market much lower. I would like to see a little bit of a drop and then a bounce that I can take advantage of.
If we were to break above the 200-day EMA, then that's a very bullish sign, but ultimately, I think you're just kind of bouncing around based on the latest interest rate movements. Right now, they are rising a little bit in the United States, so that has put down the gold market a little bit as far as momentum is concerned.
I think we probably continue to see sellers come in on these rallies, at least until inflation looks to pick up, or some type of external headline coming out of the Middle East may have people betting on that.
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