Gold Price Forecast – Gold markets break out to the upside

Gold markets rallied significantly during the trading session on Tuesday, as the US dollar lost a bit of its luster. Ultimately, there is support below at the $1185 level, an area that has been supportive more than once.
Christopher Lewis
Gold daily chart, October 10, 2018

Gold markets continue to be very noisy, moving basically upon the US dollar and its movement. I think at this point, it’s likely that we continue to see buyers on these dips, and I think that the $1185 level should continue to be important. If we can break above the $1195 level, then that should open the door to the $1200 level next. In general, I believe that the market participants will probably infer that level, and it would essentially form a “W pattern”, which of course is a very bullish sign and a reversal signal. However, I think that the $1210 level above will be resistance, so I think we are simply going back and forth in the longer-term consolidation area.

Looking at this market, I can see that there is a lot of noise, but if you use the EUR/USD pair as a proxy for the US Dollar Index, you can get an idea as to where gold should go, as it does tend to move roughly the same as the EUR/USD pair. Dollar strength is bad for this market, but it also on the opposite trade can work as well. Looking at these charts, I like the idea of buying dips going forward, and I believe that eventually we should continue to go back and forth longer-term, but we are at the bottom of the overall range, so that of course represents an area where gold is “cheap.” I like the idea of going long at these low levels, but if we were to break down below the $1185 level, I think we could unwind another $10.

Gold Outlook Video 10.10.18

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