Gold Price Analysis – Gold Continues to React to Rates

Gold Technical Analysis

The gold market has been very noisy during trading here on Tuesday as we continue to hang around the crucial 50-day EMA. The 50-day EMA is an indicator that a lot of people will be watching very closely, as it is so highly important and influential for longer-term traders. This market has been paying attention to it for some time.

The fact that we have pulled back from there, showing signs of hesitation, is not a huge surprise, especially with the interest rates in America rising the way they have overnight. Ultimately, as rates rise, that eventually puts pressure on gold. This has been the correlation between these two markets for some time.

Interest Rates and Market Projections

I think rallying from here could send this market towards the $4,900 level, but we really need to see rates soften up a bit. If they continue to strengthen, it will not surprise me at all to see gold go looking to the $4,600 level, an area that’s been important for some time.

Ultimately, this is a market that I think is going to remain very noisy, but longer-term, I do like gold. I think gold’s got a real shot at truly taking off to the upside, but we need to get through this war first. The war continues to drive rates higher, as traders’ price in the idea of energy inflation, driving bonds yields up as the Federal Reserve will have to remain tighter for longer. This will be true for other major central banks as well.

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