Gold Forecast: Reaching Towards Next Big Figure

Keep in mind that the market does tend to move in $50 increments.

Gold markets initially pulled back during the trading session on Tuesday as we continue to see gold get a bit of a boost. The US dollar is part of the issue, as a falling greenback tends to help gold in general. Furthermore, the $1900 level above is a significant barrier based upon previous action and the fact that it is a large, round, psychologically significant figure also. With this being the case, I think it makes sense that we may struggle here, but pullbacks at this point need to be looked at through the prism of value, as it looks like gold is ready to go much higher.

The downtrend line underneath is significantly supportive as it was a point to break out, so I think as long as we can stay above that indication of this trend, we should continue to find buyers. I also believe that the fact that the 50-day EMA has broken above the 200-day EMA suggests that we should continue to see buyers. It is the so-called “golden cross”, which will bring in a lot of the late money to push the markup phase of the market cycle further.

The size of the candlestick is also important, as it has a decent-sized body, and we are closing towards the top of it. That normally means that we will get a bit of follow-through, so if we can break above the $1900 level, it is likely that we will go to the $1950 level. In general, this is a market that I think has plenty of buyers underneath, unless we see a sudden run into the US dollar, perhaps based upon a spike in bond yields. However, we are not seeing that right now, so it is unlikely that we would have that catalyst.

This is a market that I do think eventually will try to get towards the $2100 level, an area where we had pulled back from drastically. Keep in mind that the market does tend to move in $50 increments, so I look at the market through that prism, but I also recognize that the buyers are most likely to continue to drive the market more than anything else.

1 2
View single page >> |

Disclaimer: DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.