At this point, it seems like the only thing that people want is the US dollar in this type of environment.
The gold markets pulled back a bit during the trading session on Thursday to drop to the previous uptrend line. The uptrend line has been crucial, so therefore it’s likely that we will continue to see buyers trying to pick this market up. After all, we had initially fallen during the trading session on Thursday, only to see a lot of momentum to the upside. The 200 Day EMA above will offer a bit of dynamic resistance, and it should be noisy, to say the least. After all, we have gone back and forth quite viciously over the last 48 hours, so it is worth paying attention to whether or not we are trying to form a bit of a “double bottom.”
The $1800 level looks to be crucial, and as long as we can say above there, it does make quite a bit of sense that we would see buyers willing to come in and pick this market, it looks to me as if we are ready to attempt to break to the upside, but I think you need to wait for pullbacks in order to pick up a little bit of value. Gold does tend to do well in times of concern, and I think it is possible that we could see buyers come into this market hand over fist. However, in the short term I would anticipate a lot of volatility, therefore I would not jump in with a huge position. In fact, I would build up a position slowly as it worked out, recognizing that the volatility is going to get worse, probably not better.
Ultimately, this is a market that if it can break above the $1880 level, it’s likely that we will continue to go to the $1900 level, and then the $2000 level after that. Having said that, we would need to see interest rates drop quite drastically or silk type of financial shock to get things moving in that direction. If we were to break down below the $1800 level, then we could see a lot of negativity in this market, pushing it down to the $1750 level, followed by the $1700 level. At this point, it seems like the only thing that people want is the US dollar in this type of environment.