The gold market declined throughout Thursday’s trading session, as it has been doing for some time. The market is likely to exhibit a great deal of erratic behavior at this time, and as we approach the $1700 level, there will be a substantial amount of support that extends down to the $1680 level. Consequently, the market is expected to continue to experience a great deal of volatility, but if gold prices go below $1680, the gold market might begin to unravel significantly. In such a scenario, I estimate gold will hit the $1,500 mark.
Remember that the release of the jobs report on Friday will have a significant impact on what happens next with the US dollar and interest rates. Clearly, this has a significant impact on gold, therefore I believe we may be setting up for a short-term rebound, but it is impossible to anticipate a change in trend at this time. The $1750 level is a previously significant area and the bottom of the bearish flag that we broke through.
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Regardless, I believe this market will test its lows sooner or later; the question will be whether or not they can hold. The market will continue to be volatile, but I would not chase it to the downside; rather, I would begin shorting rallies when they arise. I am not interested in purchasing gold, at least not at this time. The Federal Reserve will continue to support the U.S. dollar, and gold will undoubtedly suffer as a result.