Gold Weekly Price Outlook – Gold Continues to Work Off Froth

Gold Markets Weekly Technical Analysis

Gold markets have rallied a bit during the course of the trading week, again, as we continue to go back and forth. I think at this point in time, essentially what we’re looking at is a market that is trying to work off some of the excess froth from the last year or so, perhaps even longer than that. All things being equal, the $3,200 level underneath is a large, round, psychologically significant figure and an area where buyers are going to jump in and try to pick up a little bit of value. The $3,500 level above is a significant barrier. And I think that’s your ceiling. All things being equal, we’re right in the middle of that. So, I think we have a situation where we’re essentially at what could be thought of as fair value.

The market bouncing around like this should continue to be a short-term traders delight, but if we can break above the $3,500 level, then it’s likely that longer-term traders will come in and start buying and holding on to gold. As things stand right now, a lot of people are paying attention to the Federal Reserve and its monetary policy. Fed funds futures have suggested that there was as high as a 25 % chance of an interest rate cut in July, but that has fallen. The September interest rate cut is still in the 90 % range.

So people are definitely expecting that the Federal Reserve will cut later in the year and that should continue to bring the US dollar down and therefore support gold. We have geopolitical issues, although they are getting fairly under control, at least compared to what they were just four months ago. But we also have to pay close attention to the trade situation around the world, which seems to be cooling off a little bit. So maybe that might not work in favor of gold. But as things stand right now, you have so much momentum that it’s hard to fight it. I look at dips as buying opportunities.

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