Gold Technical Analysis
Gold drifted a little bit higher during the early part of the trading session on Friday, as we continue to see a lot of noisy action overall. Ultimately, the Bank of Japan overnight gave some people a bit of breathing room, as although they raised interest rates, they did not sound extraordinarily hawkish like some people had feared.
With that being the case, the interest rate situation around the world cools off a little bit and allows gold to breathe. Gold can continue to rally. We are hanging around the 50-day EMA as well as the 200-day EMA indicators. Both are flat.
The $4,500 Level Above Has Been Resistance Previously
It is probably worth noting that the $4,500 level above has been resistance previously, so it would not be overly surprising to see it offer a bit of a target as well for the bullish traders out there.
As we head into the weekend, it will be very interesting to see how traders choose to close out the week because, quite frankly, there is a certain amount of risk going against the higher interest rates. The safety bid for gold is not as strong as it once was, mainly due to higher interest rates, which is being driven by the situation in the Middle East.
As long as rates are high, traders can get a bit of a return for paper as opposed to a non-yielding asset such as gold. Nonetheless, this is a market that looks like it is trying to stabilize heading into the weekend, and therefore, a certain amount of consolidation might be on tap.
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