The gold market got crushed during the trading session on Wednesday as we closed out the day looking towards the $1835 level. Gold is heavily influenced by the US dollar and global risk appetite, which is always in flux because most of what we are paying attention to now is in the hands of politicians. In other words, the latest chirping between Pelosi and McConnell can send the market in one direction or another. Not only do we have that issue, but we also have Boris Johnson and Ursula von der Leyen meeting late in the session as well. In other words, who knows what will happen next, but I am sure it is probably going to cause more chaos in the markets.
The 200-day EMA sits at the $1800 level, which is an area that you need to watch closely, as it is a large, round, psychologically significant figure. If we were to break down below that level, then the recent lows just underneath that area would be the next support area. I would not be a seller at this point, although it is obvious that we may have a bit of momentum to the downside, because the longer-term fundamental still looks good for gold, especially as central banks around the world are doing what they do best: flooding the markets with liquidity.
You are better off sitting on the sidelines and waiting for a supportive daily candlestick, which is exactly what I will be doing. I have no interest in trying to front-run anything here; I think something will change and we will get a reversal. Until then, it is probably best to sit on your hands, as the markets look as if they are in the mood to damage as many accounts as possible. The intraday moves have been very erratic as we wait to see who says what or what rumor comes out next of both of these situations. I can think of nothing that makes for worse trading conditions than waiting on politicians.
