With patience and a long-term approach, gold may prove to be a valuable addition to a portfolio.
Gold markets started the trading week with a significant drop, showing signs of weakness. However, the market quickly turned around to show signs of life, especially when the Europeans came back on board. Despite this, the $2000 level still poses a significant amount of psychological resistance, and the market may struggle in the short term.
If we break above the $2000 level, the market could look towards the $2020 level, where we recently saw a pullback. Gold has been strong lately, so it makes sense that we would see the market consolidate, especially as we approach such a major figure. If we can break above the recent high, we could reach the $2050 level, followed by the $2100 level.
If the market breaks down below the day’s lows, we may test the $1950 level, which should offer some support. However, if the market continues to be noisy, it could suggest that we are consolidating. Consolidation is expected as the market is overstretched, and there are likely a lot of options barriers in this general vicinity. Remember, the options market has a massive influence on the futures market, which of course as a massive influence on the spot market.
It’s essential to be cautious with position sizing due to the high volatility in most markets. However, it’s worth noting that volatility is driving gold higher, and traders are using it to protect wealth during an uncertain time for the global economy. It’s important to find value and cheaper pricing in a market that’s very bullish. After all, a market cannot go straight up in the air forever, so a little bit of a pullback would be expected. This is especially true considering just how much resistance we have seen above; therefore, I think it is more likely than not coming in the short term.
Ultimately, while the short-term outlook for gold may be weak, the market’s long-term trend remains bullish. Traders must exercise caution and have a solid investment strategy in place to navigate the market’s volatility. With patience and a long-term approach, gold may prove to be a valuable addition to a portfolio. That being said, there’s also a wealth protection component at the moment that a lot of traders are paying close attention to, so keep that in mind as well.
- Buying gold on dips continues to be the way forward.
- The $1900 level should be thought of as a short-term floor. If the gold market drops to the $1950 area and bounces, it’s a nice buying opportunity; the same can be said for $1900.
- I will be waiting for a 1 hour hammer, bullish engulfing candlestick, etc in those areas.
- I will not chase the gold market up here.
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