Markets retreat from the 50-day EMA

This is still a market where you have to be very careful about the size of positions.

  • Gold markets fell hard on Friday as the jobs number came out much stronger than expected.
  • For this reason, the market should continue to decline a little, as interest rates in the United States have started to climb.
  • Remember that rising interest rates are generally bad for gold because it becomes much easier to hold paper than to store physical gold.

Looking at this chart, it is obvious that the $1800 level is a major resistance barrier, so I think we need to pay close attention to it. If we break above here, then I think you should start wondering whether or not gold can continue higher. The $1815 level would clear the resistance and support candle with which we broke the $1800 level, opening the possibility for the market to go much higher. At this point, I think we could see this market trying to reach the 200-day EMA which sits just below the $1840 level.

On the downside, if we break below Friday’s session lows, it is very likely that we will attempt to hit the $1750 level, maybe even the $1720 level. Ultimately, it’s a market that I think continues to experience a lot of volatility, but that’s nothing new for gold. Pay attention to the US dollar and the US dollar index, as it tends to have a very negative correlation.

Higher rates, less gold

The market will continue to be very loud, but I think the one thing that probably saved gold for the day is the fact that we are heading into the weekend. Ultimately, it will be very interesting to see how this plays out as we have been in a very negative trend for a while, but obviously things could change quite quickly. Pay special attention to the 10-year note in the United States, as it has a major effect on our next destination. Higher rates, less gold. It’s not always the case, but it seems to be the case right now. If we were to break higher, while we could go higher for a longer term move, it will likely be very loud and choppy, to say the least. At the end of the day, this is still a market where you have to be very careful about the size of positions.


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