Gold markets soared during Tuesday’s trading session to briefly surpass the 200-day exponential moving average, only to demonstrate that we are not prepared to move too quickly. In any case, you must keep in mind that the gold markets are fluctuating while we determine what to do about the Federal Reserve. In the end, the Federal Reserve is influencing the interest rate market, as people attempt to determine what they will do in the future.
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The $1750 level provides some support, as does the 50-day exponential moving average (EMA) below around the $1719 level. After that, support is located close to $1,700. If we reverse direction and break to the upside, we might be looking at $1800. The $1800 mark is a large, round, psychologically significant number and a region where we have previously observed volatility. Breaking over that range would very surely eliminate any doubt that the gold market is in a bullish trend, and it might eventually reach the $2000 level.
In the interim, much of what we are observing is tied to interest rates, as there is a significant negative correlation between the two variables. However, we may begin to focus on the concept of the recession, which might be beneficial for gold as individuals attempt to save their wealth. As the market tries to figure out what it will do over the next several trading days, we may be in the midst of this transition.
