This precious metals has produced interesting results the past handful of days as it has reflected the curious state of nervous sentiment in the broad markets. Day traders always looking for a secret sauce may become intrigued with the notion that the precious metal is reflecting the results from the broad Forex market, particularly as USD centric action takes center stage. Speculators in Gold who trade the commodity frequently may find additional players joining the landscape to wager on the precious metal short and near-term.
Gold’s Sharp Reversal Reflects Shifting Risk Sentiment
Yesterday’s trading results in Gold reflected the cautiousness being seen in the global marketplace. A stark move lower developed in Gold on Wednesday, this as a sudden wave of velocity hit the USD in Forex as financial institutions clearly created a sea of storms. The lower move in Gold was then hit by a reversal higher, making the intraday trading conditions not only volatile but opportunistic too.
The current price realm of Gold has become well practiced and this may allow technical traders an intriguing window to test their perceptions. However, yesterday’s price velocity in Gold is also a sign that it is being influenced not only by speculative wagers from larger players, but a direct reflection of risk on and risk off movements being generated in the broad marketplace as folks try to ward off near-term dangers. This also makes Gold attractive for potential wagers, particularly from those who view Gold as place to park money when financial markets turn volatile.
Trading Near $4,140 Masks Gold’s Recent Volatility
For those not looking at the Gold market yesterday and now looking at the commodity’s price, the mark of nearly $4,140.00 currently being traversed may look completely normal. Gold has been swimming in its current price realm – seemingly comfortably – since the end of September with frequent tests higher and moves lower. Technically Gold may look like an interesting place to test market momentum and this in fact may be true.
As a barometer of current sentiment which is stormy to say the least in global equities and Forex, Gold is serving as true gauge. However, the price of Gold is moving fast and day traders who do not like intraday volatility may want to sit on the sidelines if they fear more violence in the broad marketplace may be seen. Gold’s price reflects opportunity, but one that is reacting to the fluctuations of nervous conditions elsewhere. Yesterday’s low of nearly $4,070.00 was a sign that although always viewed as a safe haven, that speculative frenzy can drive the price lower.
US Dollar Strength Remains a Constraint on Gold’s Recovery
The lower price action yesterday tested marks seen last week momentarily before another bounce higher and values seen in the first week of August before a strong buying wave hit Gold. The key barometer for Gold now has certainly come from USD centric price action. The strength of the USD can be compared technically to Gold and yesterday’s volatile conditions reflected the spikes in both markets like a mirror.
Financial institutions remain nervous and traders should understand that risk management is essential. Large moves in Gold can prove very costly for speculators who are not ready for the potential of sudden spikes. Looking for additional upside in Gold may feel logical, but until USD centric price action in Forex becomes weaker, Gold may find resistance upwards rather difficult.
Gold Price Chart – Trading Mirror
Gold’s Safe-Haven Appeal Offers Little Intraday Certainty
Simple notions like Gold is an ultimate safe haven and if broad markets suffer that Gold will hold its value will likely be proven over a long period of time. However, for short and near-term speculators this should not even be considered. Only long-term investors in Gold who are buying the commodity as a store of value can use this philosophy to potentially profit. Instead short and near-term traders must look at what is happening in the broad markets intraday. Gold may look oversold to many people, but it is likely to remain in a nervous price channel until sentiment shifts. Cautiousness abounds for the moment in the global markets.
Gold Short-Term Outlook: Recovery Meets Nearby Resistance
Gold’s recovery places resistance at $4,150.00 and support at $4,130.00 in focus. A sustained move above resistance could bring the higher reference level of $4,185.00 into view. A move below support would shift attention toward $4,110.00.
The next test is whether Gold can hold its recovered ground as dollar strength and broader market sentiment continue to influence trading. A firmer move through resistance would lend the rebound more credibility, while difficulty holding support would leave its durability in question.
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