Gold Prices May 4, 2016, Technical Analysis

Gold markets initially tried to rally during the day on Tuesday, but just as we did on Monday, we trying to rally but failed. We ended up forming a shooting star, and that suggests that the market is going to drop. Having said that though, there is a lot of support just below in our estimation due to the fact that we got the massive move last week. This is a market that looks like we are breaking out and going to continue to go higher given enough time, but we may have to pullback in order to build up enough momentum to do so. The $1300 level above has been pretty significant, but given enough time I believe that we are going to break out due to the fact that super banks around the world are continuing to offer nothing but low interest rates. In fact, quantitative easing could be coming back to Europe, and possibly even the United States, at least in the sense that we are not going to increase the amount of interest-rate hikes.

There is a massive amount of support below, especially near the $1270 level. That had been massively resistive for the last couple of months, and therefore I feel that this market will more than likely find buyers below. A supportive candle after this pullback should be an excellent opportunity to start going long as we are essentially taking advantage of value in a market that looks ready to go higher over the longer term. Quite frankly, I believe that we have broken out for a longer-term “buy-and-hold” type situation, and that move actually started at the beginning of this year. Gold will continue to be favored as long as silver banks around the world are looking like they are failing a bit as far as interest-rate hikes are concerned. I don’t really see a scenario in which gold breaks down, unless of course the Americans surprise everybody, but at this point in time it doesn’t look very likely as the economy is very uneven at the moment.