- Gold markets initially rallied a bit during the early hours here on Wednesday but then gave back quite a bit of the gains near the $3,900 level. Keep in mind that the gold market continues to see a lot of volatility and choppiness.
- And the fact that we gave up some of the gains tells me that we just don't really know what to do. With this being said, market participants obviously know the gold is very bullish, but it has to give back some of the gains sooner or later.
- I think there are a lot of concerns out there about the US government shutting down. I don't know why it happens from time to time, but the market always seems to react to it and it's possible. What we see here is money coming out of profits in places like the gold market and going into the treasury market. The 10-year note is definitely gaining steam during this session. So that might have a little bit to do with what's happening here. A pullback to the $3,800 level opens up the possibility of a little bit of market memory coming into the fray.
- And I think it does make a certain amount of sense. The market at one point in time had formed a massive ascending triangle measuring for a move to 3,800. So, that would be an area that traders are interested in. We have met that target, obviously, but now we have to ask questions as to whether or not we can get to the $4,000 level.
Will $4000 be Targeted?
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I think we do, but I think it will probably take a month or two. Maybe we will get there by the end of the year. I think I'd feel comfortable maybe saying that, but it's not going to be a straight path. And that's part of what we're seeing here. With the government shutting down, there will be no non-farm payroll announcement on Friday as things stand right now, and if that's going to be the case, markets will just do what they're going to do. I think a pullback offers value here that you should be looking to take advantage of. You can, if you want to micromanage the charts, make an argument that there is a bullish flag that just got broken out of with a measured move of $4,000. So, I think there's several reasons to think that we get there eventually, but I also recognize you probably have a chance to buy gold at a cheaper level. That's exactly what I plan on doing.
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