Gold Price Outlook – Gold Continues to Respect 3500 USD

Gold Technical Analysis

Gold markets gapped lower to kick off the trading session on Monday and then just started falling. This is probably not a huge surprise, considering that we tested the $3,500 level on Friday and then found the exhaustion. This isn’t to say that gold is suddenly a market that you want to be a seller of, just that it doesn’t have the necessary momentum at the moment to break above that crucial $3,500 level.

We do have a CPI numbers coming out on Tuesday, and that will have a major influence on the US dollar, which of course will have major influence on them. The gold market as traders try to bet on what they think the Federal Reserve will do next.

This is the game we’ve been playing for quite some time now, where traders start to push the Federal Reserve into the idea of perhaps cutting, only to find out that the Federal Reserve has a mind of its own and doesn’t really want to. So that’s part of what we’ve been witnessing, just a lot of volatility. Over the longer term, I suspect you have a situation where if and when we do get that daily close above $3,500, that’s probably the signal that we’re going to go to $3,800.

I would also point out that recently we have seen each low get successively higher, so that is a bullish sign as well. So, I do think the dips end up being buying opportunities in gold. The 50-day EMA is closer to the $3,356 level and rising. So, it wouldn’t surprise me if we saw buyers come in right around that area.

I don’t have any interest in shorting this market. I do think eventually we break out, but I also recognize that August is a very quiet month most of the time, just due to a lack of volume on Wall Street. So, a little bit of patience and a little bit of waiting for a better price probably is the strategy most traders will employ.

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