Gold Technical Analysis
Gold markets have chopped back and forth during the early hours on Monday as we continue to see a lot of questions asked about risk appetite and the overall direction of gold. It is worth noting that in both major precious metals markets, we have seen an explosion in volume at the top. We dropped, rallied again with less volume, and then pulled back again. It is worth noting that silver made a double top, but gold could not even do that. So, the question now is whether or not we are in the process of a topping pattern.
If we were to break down below the $3,925 level, that would be enough confirmation to believe that. If we turn around, rally, and break above the $4,200 level, then there is an opportunity for the market to go looking to the $4,400 level. Ultimately, gold is going to be driven by risk appetite, the interest rate situation with several central banks around the world, and overall momentum that we have seen in this market.
Momentum has been waning for a while, so this is interesting to look at. We will have to wait and see, but caution is needed at this juncture to determine whether or not we can continue to the upside. The best case scenario right now would be to see a lot of sideways action where the market simply gets used to being at these higher levels and starts to accept these prices and think about moving forward from here.
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