Gold Price Outlook – Gold Drifts Lower in Early Hours of Monday Trading

Gold Technical Analysis

The gold market has dropped slightly in the early part of Monday trading, but quite frankly, this is just a simple pullback from the explosive move that we saw on Friday. Now, with all of that in mind, you also have to keep in mind that the volume is probably a little lacking this time of year, as it is typical vacation season for traders on Wall Street and Canary Wharf, places like that.

The 50-day EMA sits at the $3,368 level and is rising, so I look at that as a potential support level, as the 50-day EMA has essentially acted as a trendline for months now. The upside sees the $3,500 level as a major barrier that will be difficult to get above, and even if we did, I think at that point, you still have to expect some type of fight. The US dollar is strengthening a little bit in the early hours on Monday, so that does suggest that gold might be a little bit choppy, but either way, at this point, I still favor buying dips in gold as we’ve been in a very strong uptrend for some time and have now just been working off some of that excess froth in the market.

On a move above the $3,500 level, I would take the measured move of $300 and expect a move towards the $3,800 level. On a breakdown, I believe there’s plenty of support at the $3,300 level as well as the $3,200 level. I don’t have any interest in shorting gold. I would need to see some type of major shift in the overall economic picture to even start thinking that.

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