The gold markets continue to be brutally tossed around on Tuesday, as volatility persists everywhere. As the rest of the globe has seen so much volatility, it should not come as much of a surprise that gold has also fluctuated. After all, the US dollar is the subject of intense speculation in both directions, and this is a big factor in what transpires here.
I continue to believe that the $1680 level is significant, along with the direction of the U.S. dollar. The market has a strong negative correlation with the U.S. dollar and interest rates, therefore it is important to monitor the performance of these two assets. If we break below the bottom of the candlestick for Tuesday’s trading session, it is probable that we will continue to grind down in an attempt to achieve the double bottom I have shown on the chart. If we fall below that level, it is extremely possible that things will deteriorate rapidly.
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.
Alternatively, if we break above $1680, we will almost likely challenge the 50-Day Exponential Moving Average (EMA), which is a prominent technical indicator that many traders follow and of course indicates that we are still in a negative market. Keep in mind that so long as the Federal Reserve must maintain extremely restrictive monetary policy, gold will likely continue to struggle to maintain considerable gains in the near future. From what I can tell, fading rallies that exhibit indications of tiredness remain the best approach to play this market.