Gold markets are trying to find buyers after what has been a brutal round of selling again on Tuesday. At this point, the markets are continuing to struggle overall.
GOLD
Gold markets have gotten hammered again during the trading session here on Tuesday as the US dollar is starting to fight back. This does make a certain amount of sense because we are at a 14-year high of US dollar shorting so that is starting to play out in the currency markets and therefore the US dollar is starting to strengthen because when that happens, you are normally close to the bottom.
The question I think I have and most of you probably have for the gold market is whether or not the uptrend can continue. I think it can, but I can make a severe argument for $4,800, the 50-day EMA and then finally the $4,600 level being targeted as potential buying areas for support.
SUPPORT LEVELS AND MARKET SENTIMENT
The dramatic meltdown that we had a handful of Fridays ago is still fresh in the mind of traders. Imagine buying gold for $5,500 and now you are down about 15% pretty quickly. With that being the case, I think there is a lot of concern out there.
Longer term, gold probably goes higher, but it is without a doubt overdone and I do think it makes a lot of sense at this point in time that gold at the very least goes sideways if not falls somewhat in order to offer buying opportunities. There is a major uptrend line that I could probably draw in a couple of different ways on this chart.
That might coincide with $4,600. We will just have to wait and see if we turn around and take out the $5,150 level, that would be very bullish. But quite frankly, I do not want to see impulsive bullish behavior in the gold market. I do not think that is very good after what we just saw.
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