Gold Technical Analysis
The gold market initially fell during trading on Monday, only to turn around and show signs of life again. By doing so, it looks pretty strong, and it is worth noting that the hammer being formed is sitting right here at the 50-day EMA. I have said in the past that I believe $3,200 will be a major floor in the market. That’s assuming we get there, but quite frankly, I don’t even know if that happens. With this, I believe that eventually the market will take off to the upside. But of course, you had pretty tough selling on Friday as the market dumped it.
If we were to break down below the $3,200 level, then we could see a pretty significant drop down to $3,000. But as things stay right now, I think we’re probably heading back to the upside, especially if the US dollar continues to weaken against other markets. So, interesting times, and of course, the risk premium may have been taken out of gold. It is perhaps a little bit of an overreaction to the piece in the Middle East because there were plenty of reasons for gold to go higher to begin with.
