During the course of the past week, gold markets have been extraordinarily robust, as risk aversion has diminished significantly. It appears that we are attempting to reach the $2000 mark, but it will be extremely challenging to do so. In spite of the possibility of a short-term retracement, it is evident that the market has decided to move higher, and gold must be viewed through this lens.
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Pay strict attention to the Federal Reserve next week, as there will be a great deal of commotion surrounding the decision and the subsequent press conference. Ultimately, the market will have to ascertain what the Federal Reserve is willing to do, and as a result, a great deal of US dollar expectations will be built into that assumption. Obviously, the US dollar and gold can both rise at the same time, but I believe that, for the foreseeable future, people will seek to protect their wealth. However, we are approaching a formidable resistance barrier.
If there is a pullback from here, I anticipate strong support near the $1900 level. The $1900 level is a large, round, psychologically significant number from which we had previously attempted to move away. Ultimately, this is a market that has been on inertia for a while, and I believe we may now experience a slight decline. Nonetheless, if we were to surpass the $2000 threshold, this could truly take off.
