Gold markets rallied a bit during the day on Wednesday, perhaps in reaction to a falling US dollar, but quite frankly I think there are a lot of things out there pushing this market around. You can look at this as a market that is essentially trying to figure out where to go next, and I think that it’s only a matter of time before we break out to the upside, but we need to clear the $1380 level. If we break above there, the market should continue to go much higher, perhaps reaching towards the $1325 level. Otherwise, the uptrend line underneath will offer support, so if we break down below the uptrend line, that’s an extraordinarily negative sign, perhaps down to the $1275 level.
In general, this is a market that were made and noisy, but I think that the prudent investor will use very small bits and pieces to get involved, and not put too much to work and keep your leverage low. Ultimately, this is a market that I think continues to show signs of difficulties, so I would think of this as more of an investment than anything else. I think that the general attitude of this market will be higher over the longer-term, but the short term is going to be very difficult to deal with and I think that the US dollar will of course have a lot to do with where we go as it tends to move in the opposite direction. Expect noisy and difficult conditions.