- Gold markets continue to be very noisy during the month of July, and I think August will be more of the same due to a serious lack of volume during the month of August in typical trading years.
- After all, this is a market that continues to see a lot of volatility and choppiness in a well-defined $300 range, and at this point I’m not sure what it will take to break out of that area.
Consolidation Range
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The $3200 level below is a massive support level, just as the $3500 level above is a massive resistance barrier. There is what I considered to be an “inner consolidation area” between the $3300 level and the $3400 level. So, in other words, I think there are plenty of places to see a lot of noise and choppiness, and unless we put some external pressure on this market, we may very well just jump back and forth in the same range for the month. I am bullish in general, but I also recognize that we need some type of momentum to get things moving.
All things being equal, I do believe that eventually we could break out to the upside, but I don’t know if it will be during the month of August. If it is, then it probably means that the US dollar is falling, or perhaps there is a major “risk off” move in the markets, and gold will be used to protect wealth. I do recognize that we have been in a long-term uptrend for some time, at least until the last couple of months. This consolidation area lines up perfectly with the old adage of “sell in May and go away” that Wall Street quite often will quote. Perhaps that’s all there is, but if we were to break down below the $3000 level, then I think you’ve got a situation where gold really starts to crumble. I give that about a 15% chance, so I am still looking at short-term pullbacks as buying opportunities.
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