- Gold markets have pulled back a bit during the trading session on Monday, as we got a little too close to the $3500 level.
- This is an area that recently offered a massive amount of resistance, so it does make a certain amount of sense that there is “market memory” in that neighborhood.
- If we can break above there, it would obviously be a very bullish sign and could send traders into the market looking for even bigger gains.
The so-called “measured move” in this market is $300, suggesting that we could go as high as $3800 before it’s all said and done. It doesn’t necessarily mean that it’s going to happen overnight, nor does it mean that it’s going to be easy, but if you use the “measured move” as part of your strategy, then you have the possibility of seeing this target.
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Technical Analysis
Obviously, the technical analysis for gold is positive overall, but I do think this $3500 level is going to be a bit difficult to overcome. On a pullback, which oddly enough did happened during the day on Monday, despite the fact that the Middle East is basically on fire at the moment, we could see a drop toward the $3300 level, an area that’s been supported and also has the 50 Day EMA hanging around that level. The 50 Day EMA attracts a lot of attention, and therefore we need to be cognizant of it. Anything below opens up the possibility of a move to the $3200 level, which obviously has been important more than once.
I think at this point in time gold will continue to be very noisy, which makes sense considering that there are so many moving pieces at the same time. We have conflicts in the Middle East, but we also have the Federal Reserve possibly having to cut rates down the road. Furthermore, we have central banks around the world looking to hoard gold as well, so I do think there are tailwinds for the asset, it’s just that we may need to go sideways in this $300 range for a while.
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