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Gold Continues to Wait for Jerome Powell


In the next candle or 2, things will be quiet and then get suddenly volatile.

  • Gold markets initially trying to rally during the training session on Monday, but we continue to see a bit of hesitation just above.
  • This makes quite a bit of sense because the market has run rather hard to the upside, and eventually you need to find more buyers to get involved.
  • This is not to say that I think that the trend is over, just that I think a pullback is almost certainly going to happen rather soon.

A Pullback Is On Sight

I anticipate the Jerome Powell could be what it’s waiting on, as there will be a press conference after the interest rate hike on Wednesday. Whether or not he chooses to be tight with monetary policy you will be open for debate, but I think this is a situation where the market is trying to figure out what to do next as it had gone too far. I think it would make a lot of sense to see gold pull back a bit heading towards that announcement, as traders try to take profit. Think of it this way, if you have been long with gold this entire time, you have made a killing, so there’s no point in giving back a bunch of money due to a liquidity drain around this major announcement.

If we do get that pullback, then I think the $1880 range does make a certain amount of sense for the initial pullback, because it was such a major resistance barrier previously. A move down below there then opens up the possibility of the $1850 level, which has a certain amount of psychology attached to it. The 50-Day EMA sits underneath there and is rising to meet that area, so I think that makes quite a bit of sense.

On the other hand, if the Federal Reserve shocks the market somehow in a very dovish tone, then I think we break above the highs of last week and go look into the $2000 level. I do think that we are more likely than not going to see traders tried to push this market to the $2000 level, but it may take a certain amount of time to get there. I do like the idea of buying dips as opposed to chasing momentum, but we will have to wait and see whether or not we get that type of value. In the next candle or 2, things will be quiet and then get suddenly volatile.

XAU/USD chart

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