Gold Price Analysis – Gold Drops on Wednesday Again

Gold Technical Analysis

The gold market has fallen pretty significantly in the early part of the trading session here on Wednesday, but as you can see, we are approaching the $4,000 level. The $4,000 level of the course is a large, round, psychologically significant figure. If we were to break down below there, it’s possible that the market could go looking to the $3,500 level. This is an area that has been important in the past as well.

Short-term rallies at this point in time could face quite a bit of resistance near the $4,200 level. I think it’s interesting considering that rates are dropping and gold continues to fall. This tells me that traders believe inflation is going to start falling rather significantly.

Technical Breakdown and Inflation Expectations

If we break down from here, I do think that the $3,500 level might be an interesting buying area, but we should also keep in mind that the 50-day EMA is rapidly heading towards the 200-day EMA to kick off a downtrend. This is a massive rounding top pattern here, so if we give up $4,000, this could be the beginning of a pretty significant drop in this market, as it would be a big psychological number giving way to selling pressures.

Ultimately, I think today, on Wednesday, we may get some answers. I’m watching this very closely. I’m not going to be buying or selling today, but by the end of the day, we should see whether or not the buyers are willing to come in and support this market. At this point, we are about to find out where the next $500 move will be found in this asset.

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