I believe that the Federal Reserve is going to have to continue to do everything they can to fight inflation, and that means that they are going to be extraordinarily hawkish.
The $1620 level underneath has been massive support as we have formed a little bit of a “double bottom” which of course is a very important level to watch. If we break down below the level, then it’s likely that we go down to the $1600 level, and then possibly down to the $1500 level.
I do believe that the US dollar continues to strengthen for quite some time, and therefore it’s likely that what we see is a short-term rally that is sold into every time we do bounce. I believe that the Federal Reserve is going to have to continue to do everything they can to fight inflation, and that means that they are going to be extraordinarily hawkish.
That hawkish behavior will of course continue to crush the value of gold, as interest rates will continue to rise, and large players will be much more comfortable holding paper and taking advantage of interest rates than storing gold. After all, it cost quite a bit of money to store gold, and therefore you need to pay close attention to that issue. The $1680 level is also backed up by the 50-Day EMA, so that need to be paid close attention to as well. If we were to break above there, then it’s likely that we would see a rather big move to the upside, but I would not hold my breath for that, because quite frankly it is a situation where that is your ceiling in the gold market now.
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