Gold Markets Have a Significant Breakdown

Gold markets have pulled back significantly during the trading session on Wednesday after initially gapping higher. The gap was a bit too much in a market that had been overbought, to begin with, and therefore we plunged towards the $2000 level. The selloff was quite vicious, and quite possibly very needed. After all, a market cannot go straight up in the air forever, which is basically what you are banking on if you started buying gold near $2050.

Gold Price Predictions Video 10.03.22

Now that there are plenty of people up there “holding the bag”, the markets will go looking for stability underneath in order to get long yet again. I do think gold has a longer-term trajectory to much higher pricing, but that does not mean that has to get there tomorrow. When a market gets overbought like this, the reaction is quite nasty and is very possible that gold has further to fall in order to satisfy the possibility of stabilization. At the very least, we are looking at a situation where we need to get a bit of sideways action at the very least.

It is worth noting that the futures market is near the $2000 level so that in and of itself could be an area that markets focus on. We would need to see several days of sideways action for that to stabilize things, or perhaps pullback towards the $1950 level. Either way, I think this is a market that cannot be shorted, simply because we could get a headline coming out that shocks the markets and have people running towards gold yet again. Ultimately, Jesse Livermore once said, “sometimes we get paid to wait.” I think this is one of those times.

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