Gold Forecast: Continues to Chip Away at Support – 21 September 2022

Ultimately, this is a market that I think will continue to be noisy, and rallies could happen. However, rallies are more likely than not going to be sold into at the first signs of exhaustion. I have no interest in trying to buy this market, at least not until we break above the 50-Day EMA, and at the very least would only consider it then. I would rather see the Federal Reserve do something about its monetary policy to change any impressions as to where we go next. This is a situation where I am looking for signs of exhaustion to start shorting.

Keep in mind that the Federal Reserve is going to raise interest rates this week, so the question now is going to be whether the Fed sounds extraordinarily hawkish, or if they open the door for a potential reversal. It’s very difficult to imagine that happening anytime soon, so with that being the case, I think you are just looking for opportunities to get long of the US dollar, which is essentially what you are doing when you short this commodity market.

If we do break above the highs of the last couple of days, it’s just simply a matter of time before we get an opportunity to get short. However, Jerome Powell does shock the market by suggesting that perhaps the Federal Reserve is getting relatively close to changing its monetary policy, gold will be the place to be. However, that’s very unlikely to be the case, but is always something that you need to pay close attention to. In this scenario, gold markets could reach the $2000 level over the longer-term move. Unlikely to happen, but that is our longer-term trade, especially as this is an area that has been supported multiple times over the last couple of years so he would be an area where you would see that potential. All things being equal though, I think we go lower.

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