Gold markets have fallen rather hard during the trading session on Friday but found plenty of buyers near the $1700 level. That of course is a good sign, as the market had been falling apart for a while. The question now is whether or not interest rates in the United States have stopped rising, because that has been a major driver with been going on in the gold market. The fact that the $1700 level has held the way it has tells me that there is at least a significant fight ready to be had here.
The shooting star from the candlestick on Thursday had me believing that we would break down again, but the reaction on Friday tells you that there is more of a fight on hand then it originally appeared to be. If we break above the top of the shooting star from the trading session on Thursday, that could open up a move towards the $1800 level before it is all said and done. Regardless, you should keep an eye on the 10 year yields in America, as it does tend to move in the opposite direction.
The gold markets have been pummeled for some time, and now it looks like the markets are starting to think about the idea of finding value. After all, gold should hedge against inflation and if we are going to get inflation it is likely that plenty of value hunters are interested. In fact, it would not surprise me at all to see this be the bottom of the market, but we need to get some type of momentum going. With that being said, the market is going to be choppy to say the least so pay attention to the lows, and of course the shooting star from the price action on Thursday. That should give you an idea as to where we are going next but keep your position size relatively small until your trade starts to work out for you as these days, we have seen extreme amounts of volatility which of course can wreck your account if you are not cautious. Ultimately, I do think that gold will go higher over the longer term, but the question is whether or not this area holds it, or if it needs to go lower towards the $1500 level to entice more buyers?
