Gold Price Outlook – Gold Continues to Hang Around the 4K Level

Gold Technical Analysis

Gold markets have rallied a little bit in the early hours here on Thursday as we continue to struggle to stay above the $4,000 level. All things being equal, the best-case scenario is for gold to simply hang around this $4,000 level in order to build up a bit of confidence after the massive sell-off that we have seen. If we break down below the 50-day EMA, then it opens up the possibility of a move to the $3,800 level. The $3,800 level, of course, was the measured move of the ascending triangle that we broke out of, so I think there’s a lot of market memory there.

Short-term rallies are likely to be sold into, and really, at this point in time, the last thing you want to see is a lot of impulsive, straight-up-in-the-air type of market behavior. The $4,200 level above is a significant resistance barrier. Ultimately, I think we see some choppiness here, but it’s worth noting that every time we rally, we do tend to drift. So, I think we’re still favoring the downside, but we’re more or less in consolidation—and that does make a certain amount of sense, given how gold went straight up in the air for several months at a time.

Gold, of course, is being lifted by central bank purchasing, fear out there, and central bank easing. Beyond that, we also have questions about the global economy. But at the end of the day, the biggest candlestick that I’ve seen over the last six months was an extraordinarily negative one at the top. So the question is, is that the top of the market? So far, I’d say it still looks very much like that’s going to be the case—but breaking $4,200 kind of throws that out the window, so watch that level very closely.

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