Gold
Gold spent most of the month of March falling rather significantly, but it has turned around to show signs of life at the $4100 level. The market has been very volatile and a lot of this comes down to the interest rate markets in the United States, which of course will continue to have a major influence on Gold.
The $4600 level is an area that I think a lot of people would be watching very closely. If we were to break above there, then we could send this market looking to the $5000 level. That being said, the market had gotten far too overdone and this crash does make quite a bit of sense simply due to the fact that we had been so parabolic. Moves like this almost always have some kind of crash in order to correct the overbought conditions.
Inflation Concerns and Bond Market Questions
If we were to break down below the $4000 level, it’s likely that the market really starts to fall apart. All things being equal, I do think you have a situation where we are trying to find a floor in this market and if we can get some type of relief on higher interest rates in the United States, that could help Gold as well.
The higher interest rates in the bond market in the United States of course makes gold struggle due to war headlines. After all, there are concerns about inflation spiking due to energy cost as the Strait of Hormuz has been closed, but ultimately this is a market that I think is likely to continue to see a lot of questions asked about the bond market. The bond market is by far the most important chart to watch right now, no matter what you are actually trading.
But if and when we get peace breaking out in the Middle East, that frees Gold to go higher as the US Dollar will almost certainly fall. In other words, you’ll need to pay attention to the 10-year yield, the US Dollar Index, and the gold markets to get this right in the month of April. This will be a very noisy market, but if you are following the correct charts, you should be able to navigate this environment.