The gold market continues to see a lot of buyers on each dip.
Gold
The gold market has rallied quite nicely during trading on Wednesday as we continue to see a lot of back and forth right around the crucial $5,000 level. It looks as if the market isn't quite ready to take off to the upside, but if we were to break above the $5,150 level, it could open up a move to the $5,500 level.
Short-term pullbacks offer buying opportunities in a market that's obviously been very bullish, but you also have to keep in mind there are a lot of issues out there that have caused a bit of concern underneath the uptrend as well.
After all, that being said, this is a market that I think was overdone and it is a market that will be looking to stabilize a bit, and I think that stabilization is important. In fact, that's the most bullish scenario I have right now: stable with a slightly upward twist.
Strategic Market Outlook
Buying short-term dips makes quite a bit of sense, but I would not get married to a huge position here. Longer term, it's very likely that gold rallies, but I could also see gold revisiting $4,800 or the 50-day EMA.
Geopolitics continue to push gold higher and of course central banks around the world for the most part are either loose or getting there, especially of note would be the Federal Reserve, which of course has a major influence on gold in and of itself. The US dollar has strengthened a bit over the last couple of days, and it doesn't seem to have an influence on the gold market; we may be going back to a complete decoupling from the US dollar itself. That is not the craziest thing—it happens more than most people know—and over the longer term, I think we're just simply trying to recover from this traumatic sell-off that we had a couple of weeks ago. I remain bullish but I also recognize that you have to keep your expectations somewhat reasonable.
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