Gold Forecast: Markets Look Stretched – 21 March 2023
It’s worth noting that the gold market recently broke higher to make a “higher high,” which is a positive sign for the market.
One potential reason for a pullback is that traders may be looking to take profits before the volatility that Jerome Powell’s actions could bring to the market. The Federal Reserve meeting on Wednesday is likely to have a significant impact on the market, and traders may be looking to get ahead of any potential moves. Additionally, if the Federal Reserve continues to focus on inflation, it could strengthen the US dollar, which would put negative pressure on gold prices.
Despite these potential headwinds, there are still reasons to be optimistic about gold. For one, we are overbought, so a pullback would not be unexpected or necessarily a bad thing. Furthermore, the $1950 level underneath could provide support, and the $1900 level will almost certainly be a significant level of support as well. Additionally, the 50-Day EMA sits at the $1870 area and is turning higher, which could be a positive sign for the market.
If we were to break above the highs of the trading session, it could send the market much higher, potentially creating a “blow-off top” situation. However, as mentioned earlier, parabolic moves tend to have massive pullbacks, even if the market continues to go higher. Between now and Wednesday, there is likely to be a lot of uncertainty and volatility in the market, so investors should be cautious with their position sizing and not read too much into every little move.
It’s worth noting that the gold market recently broke higher to make a “higher high,” which is a positive sign for the market. This suggests that there is still significant upside potential for gold prices, even if we do see a pullback in the short term.
The gold market is currently in a state of flux, with a lot of potential headwinds and risks on the horizon. However, there are also reasons to be optimistic, as the market has recently broken higher and there is still significant upside potential. As always, investors should be cautious and thoughtful in their approach to the market, especially in the lead-up to the Federal Reserve meeting on Wednesday.
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