Gold markets have rallied rather significantly during the course of the week, bouncing from the crucial 38.2% Fibonacci level, and the previous trendline that we had dipped below, and now find ourselves above. With this being the case, I think you’ve got a situation where the market will continue to be very noisy, but now that we are approaching the $2000 region, this is an area that probably causes a lot of resistance. With that being the case, I think we are more likely than not going to continue to try to carve out some type of trading range, which makes sense considering that the bond markets in the United States continue to offer higher rates, despite the fact that they had dropped previously. They are still extraordinarily high, and traders have a hard time ignoring that.
On the other hand, it’s probably worth noting that the gold market could get a bit of a boost due to geopolitical concerns, as there are so many problems around the world right now that clearly gold might be a good way to protect wealth. In that environment, we could very well break out to the upside. However, it’s probably worth noting that there has been a massive amount of resistance between the $2000 level in the $2100 level. With that, I think it is going to take another fundamental move for gold to finally break out, but right now I would not be interested in shorting, I think rather you are more likely than not going to see shorter-term back and forth trading and therefore longer term traders may struggle for a bit of clarity.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.