Gold Price Outlook – Gold Continues to See Reactions to Middle East

Gold Technical Analysis

The gold market fell pretty significantly during the early hours on Tuesday as a ceasefire has been agreed to by both Israel and Iran. And this takes some of the geopolitical hype out of gold. That being said, there are still plenty of reasons to believe gold goes higher over the longer term. And we are currently roughly in the middle of a larger consolidation area anyway.

So, you really can’t read too much into the candlestick by itself. The $3,300 level could be significant support now that the 50 day EMA is there as well. But even if we break down below there, we have structural support and $3,200, which is the bottom of the consolidation area that we have bounced around in. The top of that area, the $3,500 level, has proven to be pretty difficult to break above.

And now we’re in a situation where we’ll have to see whether or not the currency markets could give a hand. After all, the US dollar starts falling, it is possible gold gets a bit eventually, but there’s so much going on right now at the same time that it’s not a huge surprise that we’re still in this $300 range. I believe that this is a buy on the dip market until proven otherwise and that would be somewhere below $3,000.

So, you have to be careful with gold. It is moving on the latest headlines right now, which makes it a little bit difficult to trade. So, position sizing will be crucial. This is going to be true with any commodity at the moment, but especially gold, as it’s considered to be a safe asset, and one headline coming out of the Middle East could turn things right back around. But as things stand right now, it looks like everybody’s pretty relaxed, and it has taken some of the fear trade out of this market.

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