During Tuesday’s trading session, gold markets initially rose, but swiftly retraced their gains as it appears the market is finally losing pace. The market is positioned just above the 200-Day Exponential Moving Average, which is a large, round, psychologically meaningful number. If we were to break down below that level, it is probable that the market might fall below $1750, and below that level, the market may begin to deteriorate significantly.
Keep in mind that the US dollar has been sold off significantly, and as a result, the gold market has skyrocketed. Recent market movements have revealed a negative connection of 94% between the U.S. dollar and gold. In other words, their movements are nearly diametrically opposed. The $1800 level above is a large, round, psychologically significant number and a region where we have historically observed selling pressure.
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Because of this, it is quite probable that we will need to retreat in order to gain sufficient impetus to ascend. However, if the U.S. dollar begins to surge once more, the market might very well undergo a rollover. Keep in mind that the market continues to experience a great deal of volatility, therefore it is the one thing we must focus on the most. In the end, I believe the market is experiencing a “fade the rally” type of momentum. Nevertheless, if we were to break above the $1800 level, we could really begin to accelerate at that point.