August should be a very noisy month for the gold markets, as traders try to figure out what to do. It has been bullish during the majority of July, and I do think that the recent bounce that we had from the 38.2% Fibonacci level, essentially the $1900 level, suggests that we have further to go to the upside. In general, I do think that matters, especially as we formed a perfect hammer at the 50-Week EMA.
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On the upside, the $2000 level is going to be your short-term target. If we can break above there, then the $2050 level comes into play. A lot of this is going to come down to the US dollar, which is most certainly in a state of flux at the moment. As it appears that the Federal Reserve is relatively noncommittal, it makes sense that we would see a lot of questions as to what they are going to do. That being said, August is typically rather quiet for traders, so gold might enter a bit of consolidation during the month as we try to build up the necessary momentum to go higher.
Another option would be for the market to simply pull back in order to find buyers again, which would not necessarily be a bad thing.
- The $1900 level will continue to be crucial, and therefore as long as we stay above there, I believe that the market goes higher in the longer term.
- However, if we were to break down below the $1900 level, then I think you have a real shot at goal dropping all the way down to the $1800 level, or the 61.8% Fibonacci level.
- That is unlikely at this point, but if we suddenly get a huge move higher in the US dollar, then that could change everything.
With this, I would make this the least likely of outcomes for the month, even if we do get a pullback. A pullback more likely than not just simply offers a chance to pick up a little bit of “gold on sale.”
If we just go straight up in the air, I would anticipate that there will be even more selling pressure near the $2040 level, so I’m not necessarily willing to chase this market to the upside, at least not for anything more than a short-term trade.
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