Gold Price Outlook – Gold Continues to Work Off Froth

Gold Technical Analysis

The gold market has gone back and forth during the course of the early hours here on Monday as traders are keeping an eye on the crucial $3,700 level. Short-term pullbacks offer buying opportunities in this market, I believe, but also keep in mind that the Wednesday session is the Federal Reserve interest rate decision, and a lot of people will be paying close attention to that. It’s not so much what the decision is. I think most people recognize it will be a 25 basis point cut. What’s going to be interesting is the statement and, of course, the press conference.

If it really starts to look like the Federal Reserve is concerned, that could get the gold market rallying even further. We are a little bit stretched at this point in time, so you have a couple of different things that you can do here. The first one is that you can go sideways in order to grind away some of that excess froth. The other one, of course, is pulling back. And if we pull back a bit, then the $3,600 level might be an area of support. After that, we have the $3,500 level, which I think is the absolute floor in the market.

The 50 day EMA is sitting right around the $3,500 level as well. And therefore, I think that close attention has to be paid to. When you zoom out, you can see that the market has recently broken out of a massive ascending triangle. And as a result, you can take the measured move of that expected jump and expect to see gold go looking at the $3,800 level. There’s nothing on this chart that suggests that it won’t happen. It just doesn’t necessarily have to happen right away. I think pullbacks will continue to offer buying opportunities for most people in this market.

For a look at all of today’s economic events, check out our economic calendar.