Potential signal:
- I am a buyer of gold on a drop to the $3200 level, with a stop loss at the $3175 level, aiming for a return to the $3500 level.
- Keep in mind this is a swing trade, see you will need to be very patient.
- The alternative scenario is that we get a daily close above the high of the Friday candlestick, then I would be a buyer at that point and aim for the $3500 level, with a stop loss just below the 50 Day EMA.
The gold market has fallen quite a bit during the trading session on Friday, to break down below the crucial 50 Day EMA. Ultimately, the gold market has been a bit sluggish over the last couple of weeks, and the fact that we have a lot of “risk on” behavior around the world, will continue to work against gold, at least in the short term. However, I think there are things to pay attention to as well, so I do think that sooner or later we will find some value in this market.
Looking for Value
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At this point in time, I am “looking for value.” I understand that a lot of people don’t comprehend what I’m talking about but it’s the same thing is anything else you would bite, you are looking for a “cheap price.” The $3200 level is that for me, assuming that we even get down there. It’s worth noting that the region right around the $3270 level, an area that’s been somewhat important over the last couple of months, appears to be holding at the end of the Friday session. Couple that with the 50 Day EMA, we may not drop any further. However, if we do, then I will reset my expectations and look for some type of price action near the $3200 level.
Gold still has a plethora of reasons to go higher. Granted, people are selling the US dollar in the expectation that perhaps the Federal Reserve is going to cut in September, with the current market pricing an expected 95% chance of an interest rate cut during that meeting. This actually could help gold go forward, if the US dollar starts to fall. However, recently we have seen is peace break out in the Middle East, and that has taken some of the “geopolitical risk” out of the trade. Some of the fear trade is gone. This is why I think we may have a little further to go to the downside, but ultimately, I am more than willing to have a go at gold if we either see momentum to the upside again, or test that major support level.
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