- Gold initially fell a bit during the early hours here on Wednesday but then turned around to show signs of life.
- All things being equal, this is a market that I think continues to see a lot of resistance above.
- So with this, I think you have to recognize that while the market is bullish overall, we are getting close to an area that's going to be very difficult to break through and continue to go higher. Not impossible, but difficult, nonetheless.
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If we can get above the $3,500 level, then it is likely that we will really start to take off to the upside. Short-term pullbacks are possible and quite frankly, even likely with the 50 day EMA and the 3,345 area offering support. Ultimately, this is a market that I think will continue to see a lot of traders looking at this through the prism of trying to find value on these pullbacks.
The market had been extraordinarily bullish before we got here. So, it does make a certain amount of sense that we had to work off some of the froth with the last couple of months, basically just trading in a $300 range. If we can break above the $3,500 level, and I think we will eventually, that could send gold looking to the $3,800 level.
In the meantime, you have to look at this as a buy on the dip type of scenario with market participants looking at the $3,200 level as a major floor in the market. Anything below there could change the attitude, but as things stand right now, we're just pounding away at this resistance. Eventually, probably later this month, maybe going into September, we should just jump in and start taking off to the upside.
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