Gold markets have rallied a bit during the Wednesday session, as the market is trying to break back to the upside. The gold market had been very bullish previously, but the strange candlestick from Monday has probably shaken a lot of people out. Ultimately, this is a market that will be moving based on the interest rate markets, and therefore you have a situation where the market is looking underneath at the $2000 level as a major support level. The $2000 level of course is a large, round, psychologically significant figure, and therefore I think you have to look at this through the prism of a market that has gotten so oversold in such a short amount of time, we may have a bit of a bounce ahead.
If we can break a little higher, then we would challenge the $2050 level, and the $2050 level is a significant area where we would see a lot of noise. Underneath, if we were to break down below the $2000 level, then we could test the 50-Day EMA which of course is a situation where technical traders would be involved as well.
With the jobs number coming out on Friday, I think the bond market will become active again, and that could give us an idea as to what gold could do as it tends to move in the opposite direction of rates. All things being equal, this is a situation where I think you continue to see a lot of noisy behavior, and therefore I think you’ve got a situation where a lot of value hunters might be interested, but we need to see a little bit of follow-through, which of course would be probably driven by bonds, or perhaps even risk appetite in general. All things being equal, pay attention to how the US dollar reacts to the jobs around Friday, but between now and then, it’s probably more or less just the story of stability is going to continue to see itself come to the forefront after that massive selloff that we had seen on Monday.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.