Over the longer term, I think we would probably be looking at a situation where the market could try to go all the way to the $2000 level, but I don’t necessarily hold my breath for that to happen in the short term based upon the price action that we have seen over the last couple of days.
- Gold markets initially tried to rally during the trading session on Tuesday but gave back gains as we continue to see plenty of resistance near the $1880 level.
- This has been an area of interest on the way out, so now that we have broken down through it, it should more likely than not have quite a bit of market memory, as we have seen recently.
- That being said, this is a market that I think will continue to be very noisy, and even though we have seen a lot of selling pressure, I do think that we have plenty of people out there willing to buy it.
If we look just below, we see the 50-Day EMA, and the indicator of course is an area where a lot of people pay close attention, so that of course could have a major influence on what we see next. That being said, I think you got a situation where this is a market that probably has a little bit more to go as far as correction is concerned, and therefore I think it would not be overly surprising to see gold drop down to the 200-Day EMA, which is at roughly $1800. Because of this, I think you would see a lot of value hunters in that area, but if we were to break down below the $1800 level, it’s likely that we would see the complete trend change.
Weakness Ahead
On the other hand, if we turn around break above the top of the highs of the last couple of candlesticks and it’s likely that gold markets would go racing towards a $1920 level, and then possibly the $1960 level. Over the longer term, I think we would probably be looking at a situation where the market could try to go all the way to the $2000 level, but I don’t necessarily hold my breath for that to happen in the short term based upon the price action that we have seen over the last couple of days. The market has been extraordinarily bullish for a while, but it’s worth noting that the recent selloff has been brutal, and those type of selloffs typically don’t happen in a vacuum, meaning that there will probably be further weakness ahead, at least in the short term as the market tries to find value again.
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