Gold Forecast – Gold Jumps At Open Short Covering?

Gold continues to see a lot of noisy behavior, as we have seen the market gap to the upside. At this point in time, the markets might be worried about headline risks over the weekend.

Gold

The gold market has gapped higher to kick off the trading session here on Friday, which makes a certain amount of sense because there would have been concerns about the overall headline risk that we have over the weekend. That being said, since we opened, we've heard that the Iranians are suggesting that the agreement with the Americans has never been closer.

So that, of course, puts a little bit more risk appetite into the market. It'll be interesting to see how this plays out. I still think that over the weekend, it would take very little to cause massive problems. So, I would be careful here. A short-term pop today might be the possible resolution here, but it would not take much on Saturday or Sunday for a headline to have this market gap lower on Monday. The 200-day EMA sits at the $4,375 region. That is a resistance barrier. If we pull back from here, the gap higher could offer support, which is a little closer to the $4,100 level.

Potential Floor?

The $4,000 level is an area that I think is your floor. If we were to break down below there, then it could be catastrophic for gold, think. Probably another $500 just waiting to be ripped off the price. I believe more likely than not, we are going to see a bit of sideways action here. And it's a very difficult market to be involved in and to have a position in going into the weekend, because you can find yourself in a completely different market at the open on Monday.