Gold continues to defend the same area on Monday, as the $4600 level is one that has a lot of “market memory” attached to it.
Gold
The gold market has been very choppy and noisy during the trading session on Monday as it looks like we are going to continue to see a lot of volatility. All things being equal, I'm watching the $4,600 level because quite frankly I do believe that it has a lot of market memory attached to it and I believe it is probably only a matter of time before it does in fact substantiate itself as important.
The 50-day EMA sits at $4,796 and is dropping, so that might be your short-term barrier, but I believe it is probably only a matter of time before we find our way above there. If we do, this allows us to see much higher prices.
The Impact of Yields and Market Volatility
The markets will of course continue to be noisy, but you will more likely than not see an outsized influence on gold and a lot of markets quite frankly by the 10-year yields in America. The 4.30 level is an area that I believe a lot of people will be watching closely as a flip, if you will.
If we are below 4.3% on the 10-year yield in America, that's generally good for gold and of course vice versa. Right now, we're dancing around that area, so we'll have to wait and see how that plays out. As things stand, it could be very noisy to say the least.
Furthermore, we need some type of good news to drive gold higher, ironically, as it would drive rates lower. I do believe eventually we try to get back to the $5,000 level, but it is going to be a very noisy bottoming process in the time being.