Gold Technical Analysis
The gold market has rallied quite nicely during the trading session here early on Tuesday as we had formed a hammer during the Monday session, bouncing from an initial sell-off and now it looks like the 50-day EMA is in fact going to come in and pick up the market offering support, almost like a trend line. You can see that it has basically behaved as a trend line since the beginning of the year. Now, over the last couple of months, we have seen a lot of back and forth and I think we’ve got a situation where the market has been working off some of the excess froth.
We are trading between the $3,200 level on the bottom and the $3,500 level on the top. If we can break above the $3,500 level, then it opens up the possibility of a move to the $3,800 level, based on what would be a potential measured move. Geopolitics, of course, causes gold to be somewhat attractive, but we also have a shrinking US dollar at the same time, and that is a major driver of where we’re going and with the US dollar shrinking so rapidly, that of course has people looking to get long of gold. Beyond that we have central banks out there hoarding gold and of course we have a longer term uptrend for some time and with this, I think it’s just a simple continuation of what we’ve seen for what seems like a lifetime.
