Gold Technical Analysis
The gold market initially did try to break above the $4,700 level during the week. We spent most of the week going sideways, though. But on Friday, we had seen the Federal Reserve Chairman, Kevin Warsh, give a speech out of Jackson Hole that sounded much more hawkish than people had thought.
Now, that doesn’t necessarily mean that I’m going to suddenly become bearish of gold, but we are not in the clear quite yet. If we can break down below the $4,500 level, that might lead to a little bit of a deeper correction. The 50-week EMA is near the $4,271 level, and of course, we have an uptrend line underneath there that still hasn’t been violated.
Interest Rates and Key Support Levels
The question now is going to be about interest rates. Interest rates, of course, rallied and rose after that speech, putting a little bit of pressure on the gold market.
I think we’re going to have to see how the weekend pans out, but it would not take much for the market to fall apart here for a little bit. A longer-term breakdown is a completely different story, though. It’s really not until we break down below $4,000 that we are now a negative trend.
Short-term pullback, maybe, and it does make a certain amount of sense that we shot towards a $700 gain almost immediately, and now we’re back about $180. So somewhere around the 50-week EMA, that’s about half the gains, that would be a normal pullback. We’ll have to see how traders read into this, but the Federal Reserve being more hawkish than thought, that does cause a bit of a problem for the gold market.
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