Gold Price Analysis – Gold Continues to Test Support Level

Gold Technical Analysis

The gold market has drifted a bit lower during the early part of the Thursday session, but we are still dancing around the $4,000 level, an area that is a large, round, psychologically significant figure and an area that’s been important in the past. This should have a lot of “market memory” at the moment, as traders are trying to adjust portfolios.

If we were to break down below the $3,900 level, then I think we would go much lower, perhaps down to the $3,500 level. Rallies at this point in time open up the possibility of a selling opportunity at higher levels, for example, the $4,200 level, possibly the 200-day EMA above there, which is a major technical indicator.

Inflation Dynamics and Dollar Strength

Ultimately, this is a market that I think is trying to price in the idea of the inflation situation getting better, and therefore, gold is losing some of its appeal. That being said, I think the real problem here is that the US dollar is strengthening, which has a negative influence on the price of gold, typically.

As long as the US dollar stays strong, I believe that gold is going to continue to falter. Breaking down would not be a huge surprise, just as a short-term bounce wouldn’t be either, but the short-term bounce for me, at least, isn’t a buying opportunity, at least not yet, not until we get some type of change in the overall attitude of markets. I think a bounce is probably a selling opportunity.

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