Gold Technical Analysis
The gold market initially rallied a bit during the trading session on Thursday, but has given back some of those gains as we continue to consolidate and go sideways. All things being equal, this is a market that I think is trying to figure out what to do with itself for a bigger move, and short-term pullbacks, I think, continue to look at the $4,200 level, which is an area that’s been important for a couple of weeks.
The Federal Reserve cutting interest rates wasn’t a surprise, but the bond buyback program of $40 billion a month might have been. That being said, it was not enough to push gold to the upside, and now the question is, what are we waiting for?
Concerns Around the Reaction to Fed Policy
I don’t know, but the fact that it did not scream to the upside is a little bit concerning. One would think that the quantitative easing, although the Federal Reserve refuses to call it that, would be enough to send this market higher. A pullback might be imminent, but that pullback is in the context of a larger uptrend. And I do think that we continue to see more buy-on-the-dip type of attitudes. The 50-day EMA coincides quite nicely with the uptrend line in the channel.
And I think you’ve got a situation where value hunters will certainly be interested in a market that’s been very bullish for quite some time. Central banks around the world continue to buy gold, and I think that also adds a little bit of credence to the overall uptrend. I have no interest in shorting. I do have an interest in buying cheap gold, though.
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