During Monday’s trading session, gold prices retreated slightly to challenge the $1750 level. By reversing as we have, it appears that the market will threaten to surpass the 200-day exponential moving average. If we were to remove this, it is probable that the market would target the $1800 level. There appears to be a significant amount of “panic purchasing” on the market, primarily as a result of the volatility of the US dollar.
Keep in mind that last week’s CPI statistics were weaker than anticipated, which added gasoline to the fire of a market attempting to break out. Whether or not it can truly take off is an entirely separate matter, but if we were to take out the $1800 level, you would have to see it through the lens of a market that has reversed direction. On the other side, if the price were to reverse direction and break the $1750 level, it is likely that the price would drop to the 50-Day Exponential Moving Average, which is located near the $1700 level.
You should only trade with capital that you can afford to lose while trading derivatives. The trading of derivatives may not be suitable for all investors; thus, you should ensure that you fully comprehend the risks involved and, if necessary, seek independent counsel. Before entering into a transaction with us, a Product Disclosure Statement (PDS) can be received through this website or upon request from our offices and should be reviewed. Raw Spread accounts offer spreads beginning at 0 pips and commissions of $3.50 every 100k traded. Spreads on standard accounts begin at 1 pip with no additional commission fees. CFD index spreads begin at 0.4 points. This information is not intended for inhabitants of any country or jurisdiction where distribution or use would violate local law or regulation.
You will need to pay close attention to interest rate fluctuations, as gold’s performance normally deteriorates when interest rates rise. Obviously, the reverse is the case. Also, keep a close eye on the U.S. dollar, as it has a large negative association with the gold market. In general, we are slightly overbought, so it seems reasonable that we would experience a pullback at the very least. As a result of the Federal Reserve’s reaffirmation of its intention to combat inflation, I believe this rally will be short-lived.
