The $5,000 level has been crucial for most of the month of February, and the reaction to the horrific selling at the end of January, gives me hope for this market.
Gold
Gold has seen fairly positive action during the month of February after what looked like the absolute top. I can’t say that gold will break out to a fresh new high again, and I certainly cannot predict that it will happen between now and the end of March, but the way that we have behaved in February gives me a lot of optimism for buying dips in this market.
The $5,000 level has been crucial for most of the month, and I think that makes a lot of sense as it is a large round psychologically significant figure and I'm sure a lot of options traders are watching closely. It’s worth noting that there are plenty of areas underneath that could offer support, not just the $5,000 level, but maybe the $4,800 level and possibly even the $4,600 level as well.
Geopolitical Factors and Technical Outlook
As long as we can stay above the $4,600 level, I am bullish of the market. This doesn’t mean that we can take off to the upside easily, but I think when you think about the overall attitude of the global markets and perhaps even the fundamental aspect, the market will continue to favor the upside.
After all, central banks around the world continue to purchase gold and that means that there are huge buyers in the market. Beyond that, we also have to keep in mind that there are a lot of geopolitics out there that could drive gold higher. Just think about the Ukraine war, tensions between the United States and Iran, and of course, the tariff situation between the United States and multiple other countries.
Beyond all of that, you also have the technical analysis which shows that at the beginning of February, massive buying came back into the market after what had been a horrific candlestick for the previous week. Since then, we have not made a fresh new high but we have broken back above the $5,000 level, which is a pretty significant psychologically important victory. Buying on dips, more likely than not, ends up being the attitude of the market.