Initially we saw a bit of selling in the gold market, but since have seen a bit of a recovery as rates cooled off slightly.
GOLD
Initially we pulled back in the gold market, but we turned around to show signs of life although we're still down quite a bit. All things being equal this is a market that is trying to hang on to the 50-day EMA and will move a lot based on the idea of interest rates in the United States rising or falling. As interest rates rise it makes the gold market fall and vice versa.
Initially the interest rates did spike as the markets were taking a look at the fact that there had been some hostilities over the weekend between the Americans and the Iranians. But now we're starting to get wind that perhaps the Americans and the Iranians will continue to talk and that put a little bit of hope back into the market driving down rates.
Psychological Resistance and Support Levels
At this point we are sitting just above the 50-day EMA, and we could go looking to the $4,900 level. After that I would anticipate a move to the $5,000 level which is a large round psychologically significant figure that a lot of people will be watching.
If we were to break down below the lows of the day on Monday, I think at that point it opens up the possibility of gold dropping down to the $4,600 level. I do believe that the $4,600 level will continue to be very important support and as long as we can stay above there, I think we're generally in a good place.
I would anticipate a lot of choppiness and unfortunately, I think a lot of what you are trading will be based on the random headlines that come out of the Middle East which could be just about anything at this point. So, by all means make sure you pay attention to your position size when trading gold.