Gold Technical Analysis
The gold market continues to be very active, and with interest rates drifting a little lower during the early part of the trading session, it looks as if the trend line that has been in effect for quite some time, going back to the beginning of the year, is trying to hold. Whether or not it does, we will have to remain vigilant here to find out, but dropping interest rates in America will certainly help, and that is so far what is going on in the market.
Whether or not this is a longer-term play remains to be seen as well.
Interest Rates Evolution and Support Levels
I am a little skeptical about that at the moment, but if we see good news coming out of the Middle East, or some type of either peace or just acknowledgment that even more oil is flowing, then we have a situation where interest rates probably drop due to energy inflation being less of a concern, and that could push gold higher.
That is the main problem with gold right now: we have rising rates, and non-yielding assets tend to suffer in that environment. If we do break down below this trend line, then the next very interesting place to me, of course, is $4,000. It is a large, round, psychologically significant figure that has been support previously and is good for headline traffic as well as options.
I think at this point in time, we are starting to see a little bit of a recovery. Whether or not it has any lasting power to it could very well be determined by the bond market.
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