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The gold markets fell in extremely light volume on Wednesday as Americans were all celebrating Independence Day. It is because of the lack of volume that we cannot take any move based upon this 24 hours to seriously. However, we have seen a massive surge in value and price of the gold markets over the last week or so, and this cannot be ignored.
$1650 is what would need to be sustained on a daily close in order for us to go along of this market. As for selling, we would consider it on a week candle in that range, but aren't as enthusiastic about it as the longer-term trend is most certainly up. A lot of people will argue this point, but the fact is that gold was just a bit under $300 an ounce 11 years ago.
With the various central banks having meetings this week, there's a strong chance that the "quantitative easing body" may be catching. The Bank of Japan is most certainly easing, the ECB more than likely well, and the Bank of England looks set to buy more British gilts. All of these situations lead to further easing, but the elephant in the room is the Federal Reserve. Based upon the jobs number on Friday, the market will interpret the Fed's next move in accordance to the chairman's recent comments about concerns of the employment situation in the United States. If the number comes out poor, quantitative easing is almost a given and the gold markets will shoot straight up.
However, with so many central banks easing, gold should rise overall. If you have the ability to trade this commodity in other currencies this may be a route to go. Particularly attractive would be gold in Euro denominations. Obviously, with the European Union in so much disarray, gold would gain significantly against the Euro. The one thing that may hinder this particular market is going to be whether or not there is a run into the US dollar.
On a daily close above the $1650 mark, we are willing to go along of this market for a move to $1800. As for selling, we simply won't do it until we clear the $1500 level to the downside.