Gold markets have been slightly positive during the trading session on Friday to take back some of the losses from Thursday. The market is still very sluggish and does not look very strong, due to the fact that the yields in America continue to throw it around. The Friday session was quad witching, which means that certain commodity options were expiring for a quarterly timeframe, and that can be a driver of choppiness as well.
At this point, I still do not trust anything in this market as far as buying is concerned until we get above the $1800 level. I suspect that we are very likely going to see a lot of fluctuation going forward, as there has been so much noise in the market, and that will greatly influence what happens in the US dollar, which by extension greatly influences what happens in the gold market. After all, gold has been selling off for quite some time, and not much has changed.
Underneath, I see the $1700 level as a major support level, and it is worth noting that we have bounced from there. However, it has been a relatively weak bounce and I have seen no impulsivity as far as the last 10 candles have shown. That tells me that people are not necessarily jumping into this market with any type of urgency. Because of this, I have the sneaking suspicion that we have not seen the end of the selling, and that will be especially true if we see yields in the 10-year note break above the 1.75% level, something that looks very likely to happen given enough time.
Because of all of this, I think that we are going to struggle to continue going higher, and we certainly have not seen the type of volume of that would make me believe it is going to happen quickly. If we did break above the $1800 level though, then I think at that point you would have to look at this as a trend change, and perhaps opens up the possibility of going to the $1850 level, maybe even $1900. If we break down below the recent lows, then it opens up a move to the $1500 level.
