During Monday’s trading session, gold prices climbed to the 200-day exponential moving average. However, we are beginning to exhibit indications of fatigue.
Analysis of Gold Market Technicals
The 200-day exponential moving average (EMA) has been tested by a Monday rally in gold prices. At this moment, it appears that the market will continue to be volatile, and I believe that it is likely just a matter of time until we see some hesitancy and/or selling. Ultimately, this will be determined mostly by the US currency and, of course, bond rates.
The 200-day exponential moving average has some psychological significance, thus it is likely that traders will be attracted to the market in this neighborhood. Nonetheless, the $1800 level below has provided substantial support, so we may be attempting to enter a consolidation period prior to a rebound.
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Breaking above the trading session’s highs on Monday would be a positive indication, and would almost likely have traders targeting the 50-day exponential moving average. If the market surpasses this level, it will be able to challenge $1,900. It is too soon to judge whether or not this is possible, but it is certainly something to keep in mind. Gold is currently subject to a great deal of influence, and if I were a metals trader, I would purchase gold. I am more likely to trade on waning silver rallies, or on some form of “pairs trade” in which I sell silver and purchase gold. The market is little overbought, so a pullback is probably prudent nonetheless.
