The gold markets rallied a bit on Thursday but gave back the gains as we may be slightly overstretch. Nonetheless, we have made a significant bounce.
Gold markets have rallied initially during the trading session on Thursday but gave back the gains to form a less than desirable candlestick. Nonetheless, we have seen a massive bounce as of lately, as earlier this week we had recaptured the $1800 level. The 200 day EMA which sits right in the middle of the candlestick from the Tuesday session should be thought of as a longer-term indicator that a lot of people will be paying attention to. Looking at the chart, I think it is only a matter of time before buyers would come back in on a pullback, especially as the Federal Reserve is going to continue to loosen monetary policy for the foreseeable future, so that should put upward pressure on precious metals in general.
Ultimately, I have no interest in shorting gold, at least not at this point so I think that short-term pullbacks probably offer value. At this point, I think that the 50 day EMA above is going to be a target, perhaps even the $1900 level. If we can break above that, then the gold market can continue to go much higher.
While the market has seen a lot of selling over the last couple of months it has been very orderly, so that does suggest that there is still a lot of buyers underneath as there has not exactly been much of a “panic” in this market. All things being equal, I believe that we continue to go higher, so short-term pullbacks should continue to attract people who are trying to get involved in the market for the longer-term move.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.