The gold market continues to test the crucial 200 Day EMA on Tuesday, as we are watching interest rates in the United States drop, a natural boost for this market.
Gold
The gold market has started to rise a bit again during the trading session on Tuesday as we are threatening the 200-day EMA. The 200-day EMA of course is an indicator that a lot of people will watch very closely as it is typically used to determine the overall trend. If we can break above there then some algorithmic traders will be getting involved on perhaps the daily close.
In that environment, I would anticipate gold running into a little bit of trouble at the 50-day EMA at $4,542, but I would also say that you need interest rates in the United States to continue to fall like they have been to give you a little bit of a boost. Gold has rallied quite significantly over the last 3 or 4 sessions, so a little bit of a giveback wouldn't be the worst thing in the world.
Key Technical Barriers and Interest Rate Dynamics
If we do rally towards that 50-day EMA, after that the next level that I would be watching is the $4,600 level. The $4,600 level is an area that I think is a pretty significant barrier if we can break above there then we probably go looking to $4,900.
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Gold tends to move opposite of interest rates, and as long as there continues to be a bit of a thought that the situation in the Middle East might get better, I think there's a real opportunity here for gold to rise because of falling rates. Ultimately, I do believe in gold longer term, I think a little bit of a pullback may do some good here though.
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