The gold markets have fluctuated throughout Thursday’s trading session, as the market has shown increased volatility. Consequently, the $1800 level is an extremely critical point of severe support for the rise. In addition to being a huge, round, psychologically significant number, you must also pay particular attention to the upward trending line.
The 50-day exponential moving average is about to cross below the 200-day exponential moving average, generating the so-called “death cross.” Obviously, this is a negative signal, albeit one that is generally delayed. This might lead to more selling, but if we break below this uptrend level, I believe gold is in grave danger.
Pay particular attention to the U.S. bond yields since they have something to say as well; higher yields act against the value of gold because it is less expensive to hold paper than to store metal. Ultimately, I believe that this is still a “fade the rally” market, but I also believe that the market will ultimately find a bottom. Long-term, I am bullish on gold, but it may see one more decline before enough bargain hunters enter the market to purchase the whole supply.
In the event that the Federal Reserve alters its tune and shows signs of wavering in its goal to raise interest rates, gold will be the first asset class in which I will want to invest my trading money.