You can prepare for the next swing lower in growth, which is part of what has been helping gold.
- Gold markets have initially fallen during the trading session on Monday, where we had reached the $1920 level, and then ended up bouncing.
- Gold has been on fire as of late, so I think it makes a certain amount of sense that we would see traders continue to look at it through the prism of chasing follow.
- We have a Federal Reserve meeting next week, with an announcement on Wednesday and a press conference which is probably going to be more important.
Markets Await the Federal Reserve Meeting Next Week
While I don’t necessarily think that any damage that Jerome Powell does to gold is permanent, it could cause a little bit of a pullback. Quite frankly, I look at that pullback as a potential buying opportunity, especially if we can get down to the $1880 level. After that, I get even more aggressive near the $1850 level, where I find even more value. This is especially true as the 50-Day EMA is coming into the picture, and could offer a bit of dynamic support.
Looking at this gold chart, it’s likely that we will continue to see buyers on dips, but if we were to break down below the 50-Day EMA, then it’s very possible that we could go looking to the $1800 level. The $1800 level has a lot of psychology attached to it, but it is also structurally important going back several years. We have been in the range for very long time, and the top of that range is closer to the $2000 level. It is because of this that I believe eventually we will get to that area. Whether or not it’s anytime soon remains to be seen, but regardless of it seems as if we are overbought at the moment, so I do believe that eventually we get some type of pullback.
Interest rates of course normally play a major factor on what gold does, but lately I believe it has more to do with wealth preservation as the world is definitely going to head into a slowdown, despite what pundits on Wall Street may choose to say. The reality is much more different than the narrative, so by paying more attention to the economic numbers and the mathematics, you can prepare for the next swing lower in growth, which is part of what has been helping gold.
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