I have no interest whatsoever in trying to short the gold market, it has been far too strong over the last several months.

Gold markets have initially tried to rally during the trading session on Friday but then pulled back a bit to show signs of exhaustion. This exhaustion makes quite a bit of sense, as we started to reach towards the weekend, the $1800 level will be casting a long shadow above the market. If we break down below the bottom of the $1800 level, then I think there are a multitude of support levels underneath that could come into play.

The $1800 level is the first place that I expect to see buyers, but even underneath I would anticipate that the $1875 level could come into play, and most certainly the $1750 level. The 50 day EMA is starting to come close to that level, and I think that $1750 will be difficult to break down through. In that area, the market is likely to bounce and continue to find the 50 day EMA as longer-term support. A bounce from there would be attractive as it would offer gold on the cheap, something that a lot of people will be looking for. The market is more likely than not to continue going much higher, reaching towards the $2000 level over the long term as the loose monetary policy will continue to be a major issue.

The candlestick for the Friday session is a bit of a shooting star so it does suggest that perhaps we have a little further to go to the downside, and therefore I think it is only a matter of time before we form a supportive candle that we can take advantage of. If we get some type of hammer or a candlestick like that on the daily chart, then I think it is only a matter of time before the value hunters take over again. The gold market is one of the hottest markets right now, so it does make sense that we would see a little bit of recovery. At this point, the longer-term uptrend line should continue to send gold to higher levels, with the next major target being the $1850 level, but I do think that by the end of the year we could see a move towards the $2000 level. In this scenario, I have no interest whatsoever in trying to short the gold market, it has been far too strong over the last several months.

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