Gold markets have rallied significantly on Thursday to reach towards the crucial $1900 level. This is an area that will attract a certain amount of attention.
Gold markets have rallied quite nicely during the trading session on Thursday, to reach towards the $1900 level. By doing so, we are testing a major round figure and an area that had previously offered quite a bit of resistance. At this point, the US dollar is most certainly on its back foot and talk of stimulus continues to drive gold higher. That being said though, do not be surprised at all to see a slight pullback. I think pullbacks are buying opportunities and the 50 day EMA underneath could offer a significant amount of psychological and technical support.
The size of the candlestick is somewhat impressive but at the end of the day $1900 was where we were always going to go looking towards. Keep in mind that the Friday session is quad witching, which is when you have multiple options expiring at the same time. With that being the case, it can throw a lot of volatility into the marketplace and that most certainly can have a bit of a “knock on effect” on gold. To the upside, I believe that we are going to go looking towards the $1950 level next, but we cannot get there overnight.
It is very likely we will see more of a “back and fill” type of action out of the marketplace. With this being the case, I do like the longer-term outlook for gold, but I recognize that this is more or less a short-term trading type of environment. For what it is worth, silver has broken above its resistance barrier so one would think that gold has at least a reasonable shot at doing the same thing.
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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.