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Gold Forecast: Gold Drifts a Bit Lower

Granted, there is a point sooner or later when we will see gold offer an attractive setup, but right now it is not showing up.


Gold markets have drafted a bit lower during the trading session on Friday as the 50-Day EMA has offered a little bit of resistance. Ultimately, gold is going to continue to move in negative correlation to the US dollar, interest rates in the United States, etc. Because of this, you need to pay attention to the bond market, because the bonds continue to sell off, that’s going to be bad for gold. Granted, there is a point sooner or later when we will see gold offer an attractive setup, but right now it is not showing up.

It should also be noted that the 50-Day EMA is sitting just below the downtrend line, so it offers quite a bit of a barrier. If we were to break through all that, obviously that would be a very bullish sign and it would almost certainly have to come with the idea of rates dropping. After all, a lot of larger institutions will have to pay storage feeds for gold if they truly want to invest in it, as opposed to simply clipping coupons for bonds. In other words, it certainly makes quite a bit of sense that gold continues to struggle in this type of environment.

If we break down below the bottom of the candlestick for the trading session on Friday, then I think it’s likely that we will go looking toward the $1680 level, which is a major level of importance as it has been both support and resistance on longer-term charts.Breaking through that opens up the possibility of a move down to the lows again.Alternatively, this is a situation where think we continue to see a lot of “fade the rally” type of training, as gold will continue to be a major victim of US dollar strength more than anything else.

If we were to somehow break through the downtrend line and perhaps even the $1750 level, then it’s possible that we could take an attempt at the 200-Day EMA, and anything above there would be an actual trend change. I don’t see that happening without the Federal Reserve pivoting anytime soon, and that’s probably what is necessary to see some type of bullish run. In other words, it’s just far too fundamentally negative for gold to take off at this point.

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