Throughout the course of the week’s trade, gold markets have declined dramatically, surpassing the $1680 threshold once more. This location has been significant more than once, therefore it is likely that it has been sliced through many times in the recent two weeks, causing a great deal of destruction. The bond market and, of course, the Federal Reserve will determine whether or not this market continues to decline from here on out.
Looking at this chart, the hammer from a few weeks ago is something to keep an eye on, because if we break below it, it’s possible that the market will head towards the $1600 level, or even even the $1500 level. Ultimately, I have little interest in attempting to buy this market in the near future, especially given the probable resistance at $1750. If we were to break above that level, then we might start to argue about a trend reversal, but I do not believe that will occur at this time.
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This market has been trending downward for some time, and I don’t see any reason to expect that will change. Ultimately, I prefer the idea of selling rallies and waiting for the Federal Reserve to alter its general stance before purchasing gold, which I believe would be a good “buy-and-hold” position at that point.
