The gold market tried to rally, but the sellers have jumped all of it, sending the markets to test the $4,000 level yet again.
Gold
The question at this point is whether or not gold holds at $4,000. After all, it is a large, round, psychologically significant figure, and it's also an area that a lot of people will be watching very closely. The $4,000 level, I suspect, will continue to get a little bit of a boost from options markets, but it is also worth noting that it's an area that was supported previously.
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Interest rates continue to drift lower in the United States, so I think that could come into play as well, but we'll just have to wait and see how this plays out. After all, we've seen a complete change in the way that markets behave, and quite frankly, I think part of it is part of the demand for US dollars—the lack of US dollars by a lot of major entities.
Crucial Support Levels and Technical Indicators
If that continues to be the case, then the $3,900 level being broken through to the downside opens up a move down to the $3,500 level. This is an area that could be very important, but we have a long way to go to get there.
If we rally from here, the 200-day EMA could be our target, but I would expect trouble at $4,200 to begin with. The next $150 below where we are now, I think, is crucial. If we were to break down below there, we could really start to sell off.
Keep in mind that the 50-day EMA is arcing lower to break below the 200-day EMA, kicking off the so-called death cross. We'll see if that happens because if it does, that could be a very negative sign as well.
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