Withdrawal of the 200-day EMA again
Gold markets first attempted to break above the 200-day EMA during Thursday’s trading session, but returned gains to show the 200-day EMA was rather resilient. If this is true then we could very well find this market moving up towards the 50 day EMA. It’s also worth noting that the $ 1,800 level is just above it, which may have caused a bit of trouble as well. However, the market is likely to see a lot of noise in general as we trade between the 50 day EMA on the bottom and the 200 day EMA on the top.
This area is essentially a “squeeze” which could cause problems. That being said, I think we still have a lot of questions about where gold is next, mainly because it comes down to the movements and returns of the US dollar in America. As yields move higher, it usually works very hard against the value of gold, so it’s likely that we would see markets pull back towards the 50-day EMA, and maybe even lower. If they fall below that level, it is likely that we will turn to that double bottom of the chart which has been so stable so far. Going below this number more than likely sees the gold markets collapse. On the flip side, if we see this market turn around and move above the 200 day EMA and, more importantly, the $ 1800 level, then suddenly things look very bullish.
On a bullish move, I expect the $ 1850 level to be targeted fairly quickly, followed by the $ 1950 level. After all, it could send money to the precious metals market and maybe even try to push all-time highs. Make no mistake this will of course also be influenced by yields in America, so you need to be careful about whether or not they start to rise. When they do, it works against gold pretty quickly as we saw earlier. On the other hand, if the yields gradually increase, the problem is not so big. This is the rate of change of the bond market more than anything else right now.