Gold markets have fallen a bit during the trading session on Tuesday but turned around to show signs of life as we continue to see a lot of volatility in the markets overall. Keep in mind that the gold markets are highly sensitive to the US dollar and the interest rate situation worldwide. As long as rates continue to see interest rates rise, it is going to work against the value of gold as you do not get any type of interest on that holding.
The 50-Day EMA comes into the picture just above the crucial $1680 level, which is an area that a lot of people have been paying attention to, as it previously was supported for a couple of years. That being said, I think this is a situation where we continue to see plenty of noise, but I’m looking for signs of exhaustion to jump on. The gold markets have been in a downtrend for quite some time, I just don’t see how that changes anytime soon. When you look underneath, there is a significant amount of support and the $1615 level, and there has been a little bit of a “double bottom.”
If we break down below there, then it’s likely that we would see a move down to the $1600 level, which is a large, round, psychologically significant figure, but when you look at the longer-term charts, it’s not particularly important. I think you find much more support near the $1500 level.
On the other hand, if we do rally above the 50-Day EMA, then we see the market possibly trying to get to the downtrend line, which is right around the $1720 level.
This is a market that I think continues to see more of a back-and-forth and volatile movement, so therefore you need to be cautious with your position size but recognize that it is more of a “fade the rally” type of situation going forward.I do believe eventually we break down below the lows, but it may take a while to make that happen.Signs of exhaustion will be a great opportunity from everything I can see, and therefore I don’t have any interest in trying to buy this market, at least not until the Federal Reserve changes its monetary policy, which it is nowhere near doing.