Gold markets fell during the trading session on Wednesday but also found buyers at the same level it had on Monday. Because of this, the market continues to see a lot of choppy behavior in this short-term area. At this point, it looks as if the market will try to figure out where it wants to go next, probably paying quite a bit of attention to the US dollar, which got hit during the day. The lows from the Monday and Wednesday session are both offering support, just as the shooting star from the Tuesday session is offering resistance.
On the other hand, I think the one thing you should be paying attention to is the idea of momentum coming back into the market. In other words, if we get some type of impulsive candlestick in one direction or the other, that tells you where we will probably go next. To the upside, that opens up the possibility of reaching towards the $1860 level, which is the top of the gap as you can see. Ultimately, that gap probably will get filled, but we would need to see the US dollar weaken a bit to really drive the point home. On the other hand, if we break down below the lows of the last couple of sessions, then it opens up a move down to the $1750 level underneath, where we had bounced from previously. Furthermore, that is also a an area that had previously been support, so I think there is a lot of “market memory” attention to that overall region.
I believe that we will probably see some type of choppy behavior, as the market is full of questions as to whether or not the US dollar is going to rise or fall, and interest rate differentials continue to be major issues amongst currencies as well. With the rush of money into the bond market, it does make a certain amount of sense that we have seen gold a victim, so at this point I do not necessarily like trading this market but if you are a short-term trader, you may be able to play around between $1790 and $1825 above. Other than that, it is a simple matter of waiting for the market to tell you what it wants to do.
