The Gold market has to decide what it wants to do over the longer term, and Friday might be the day that we figure it out.
- Gold markets have rallied rather significantly during the day, as we have gone back and forth during the trading session before shooting straight up in the air.
- That the market is likely to continue being driven by the bond markets, and whatever is happening with the yield in the United States.
- As yields fall, it makes gold much more attractive.
As we have rallied rather significantly from that point, the market is likely to continue to see the $1800 level as important, as it is not only a large, round, psychologically significant figure, but it is also an area that has seen quite a bit of action in the past. The 50 Day EMA is in this area as well, so that makes quite a bit of sense that we would see a little bit of dynamic resistance here as well. Ultimately, this is a market that I think given enough time will have to decide what it wants to do over the longer term, and Friday might be the day that we figure it out.
While it is more likely than not that we will see a volatile session, the real question is going to be whether or not the Federal Reserve will have to remain extraordinarily tight with their monetary policy, and if we get a very strong jobs number, it’s possible that we could see the interest rates rise again in the United States, as it will almost certainly mean that the Federal Reserve will have to step on the gas when it comes to tightening. On the other hand, if we were to see a less strong job number, then the idea might be that the economy is slowing down and the Federal Reserve will have to abandon plans to tighten as quickly as they say they will.
It really doesn’t matter because the market will do whatever it wants to do. Looking at this general vicinity, I think it’s likely that we continue to see a lot of noise in the $1800 level, and therefore it will come down to where we close on Friday at the end of the day. This not only tells you what the reaction would be to the announcement but whether or not people are comfortable holding gold through the weekend.