Despite the expected high volatility, the uptrend in the gold market is expected to continue.
- Gold markets showed signs of life during Monday’s trading session after initially pulling back slightly.
- Over the last two weeks, we’ve seen a pattern of buyers stepping in and picking up gold each time the market dips. The trend indicates that somewhere around the $1975 level, there is a considerable bid for gold, leading to a “buy on the dip” mentality.
- This is understandable as gold is often used as a wealth preservation vehicle, and its value continues to attract traders looking to protect their wealth.
It appears that we are at the tail end of a significant move higher, and traders are working off some of the excess froth. However, if we drop below the recent support level, we need to look toward the 50-day Exponential Moving Average (EMA) as a potential support level and a magnet for price. On the upside, if we break out above the $2025 level, it could lead to a move toward the $2050 level.
This week is expected to be very noisy, with significant market-moving events on Wednesday and Thursday. Wednesday will feature the FOMC interest rate statement and press conference, followed by the ECB doing the same thing on Thursday. Additionally, the Non-Farm Payroll announcement will take place on Friday. As a result, the first day or two might be somewhat quiet, but enough time should see an increase in volatility, leading to significant changes in the market by the end of the week.
Despite the expected high volatility, the uptrend in the gold market is expected to continue. If there is a significant pullback, it is likely that value hunters will eventually enter the market, creating an opportunity to buy gold on a dip that shows signs of support afterward.
Gold’s status as a haven asset has led to increased demand in the current economic climate, marked by uncertainty and market volatility. The precious metal has been used to hedge against inflation, currency fluctuations, and other forms of market risk. Therefore, it is not surprising that traders are flocking to gold each time the market experiences a selloff.
In conclusion, gold markets are expected to hold steady amidst high volatility this week, with significant events expected to influence the market. While it is possible that there may be a significant pullback, traders are likely to buy gold on dips that show signs of support afterward. Gold’s status as a haven asset continues to attract traders looking to protect their wealth, and its value is expected to remain strong in the current economic climate.
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