• The gold market pulled back just a bit during the trading session on Monday, but you should keep in mind that the futures market was somewhat limited as it was Memorial Day in the United States, so it closed early, and of course a lot of volume was missing as major institutional investors in the United States weren’t bothered.
• That being said, this is a market that has been very noisy over the last couple of weeks, but it does look like it is a situation every time we pull back significantly, buyers are willing to come in and pick up value.

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Uptrend Continues

All things being equal, the market is in the significant uptrend that has been part of the lexicon for the gold market, as well as many of the other metals markets for some time. The $3200 level below is a significant amount of support, especially as the 50 Day EMA sits there as well. On the upside, we have the $3500 level offering a bit of a ceiling and breaking above there would kick off the next major leg higher in the market. That being said, I think it takes a certain amount of time before we finally do break to the upside, and I think that the markets will continue to look at the momentum in gold as being to the upside, but I think it does make a certain amount of sense that we chop back and forth as we are trying to work off some of the massive froth from the big move higher.

Pay attention to the US dollar, it does have a bit of a negative correlation to gold, but we also have to keep in mind that the geopolitical situation still favors gold, as well as the profligate spending by major industrial countries, which of course makes gold much more attractive as central banks will try to pad their reserves with “hard money.” In other words, I like the idea of buying dips still.

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