Gold (XAU/EUR) Price Analysis – Gold Tests €4,000 as Golden Cross Forms

The reality, though, is gold is rising against everything, and this is an indictment on governments around the world who are neck-deep in debt.

Gold / Euro (XAU/EUR)

The gold market has been very strong against the U.S. dollar, and this, of course, is no surprise with the reaction to the idea that the Treasury market is buying twice as much as once expected on the long end of the yield curve next month. The reality, though, is gold is rising against everything, and this is an indictment on governments around the world who are neck-deep in debt. This is no different in places like Germany or France. The United States gets all the headlines, but the U.S., Japan, Germany, Great Britain—all of these big countries are heavily indebted, and the gold market is starting to sniff some of this out.

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Right now, it looks as if the gold market is trying to reach the €4,000 level. It has fallen just a bit shy on Friday, but it is worth noting that we rallied pretty significantly and then formed a broadening pattern, which then broke to the upside, so it showed volatility picking up. Then over the last couple of days, we've seen gold really explode. Some of this is a knock-on effect of what gold is doing against the U.S. dollar, but really at the end of the day, it is a somewhat independent market.

Technical Resistance and the Golden Cross

So, the €4,000 level, of course, is an area that will cause some headlines. It's the middle of the previous consolidation between April and late May. We'll see if that holds up. Short-term pullbacks at this point in time should see some support in various places. The €3,800 level is an area that I think is high probability, and we're starting to see the 50-day EMA break above the 200-day EMA, kicking off the so-called golden cross.

I do expect some headwinds and a little bit of a wiggle above where we're at right now. There is a lot of structural noise there, but ultimately, gold is very strong, and it will fluctuate. It will be a little bit different against certain currencies. Clearly, it's really hammering the U.S. dollar right now. The Japanese yen would be susceptible to gold, but the euro, even as strong as it is, as you can see, gold is the winner.

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