Monday’s session began with gold markets falling to the point where it appeared they were about to break down. However, the market has respected the gap from a few weeks ago, and it now appears that we may attempt a recovery. Ultimately, this market is attempting to pay close attention to the bond market and yields at the same time.
Noting that the 50 Day EMA is at $1784 and falling, I believe we have a situation where this indicator could cause problems, not to mention the fact that the $1800 level above will introduce some “market memory” into the equation. The 200 Day Exponential Moving Average is currently at $1822 and falling. In other words, I feel there is a substantial amount of resistance immediately above, and it is only a matter of time before sellers start selling.
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If bond market yields begin to rise, this will undoubtedly operate against the value of gold, therefore pay close watch. The market will likely continue to be extremely volatile, so you must exercise extreme caution. However, I believe we are in a circumstance where selling short-term rallies should be profitable. If, on the other hand, we were to break above the 200-day exponential moving average, then a great deal would change. In the current state of affairs, though, a little bit of patience will go a long way.