- The gold market initially did rally a bit during the trading session on Wednesday after gapping lower at the open but then started to fall again.
- I'm not worried about the gold market and the trend overall, but I do recognize that we are a little overdone here and a bit of a pullback certainly makes quite a bit of sense, and I even think that it could revisit the $3,700 level.
- That's an area that previously had been resistance and now should be support.
All things being equal, if the market were to break above the $3,850 level, then it shows an extension going to the upside. The move that we had recently seen breaking out of the ascending triangle was a measured move of $3,800. We have now fulfilled that. So, I think at the very minimum, we have done what we thought would happen.
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Still Bullish Overall
Looking at this chart, though, this is a very bullish market, and I just don't see a reason to get short of gold. Really at all right now. Even if you told me that gold was going to drop to $3,700 over the next couple of days, I wouldn't even bother shorting it. I'd rather buy it at that area to pick up cheap gold.
Regardless, we have a situation where the market is extraordinarily bullish. And I think we really are starting to think about the $4,000 level. This is a market that I think continues to be volatile, but it continues to be supported by the fact that central banks around the world are buying gold. People are focusing on the federal reserve and the possibility that they will cut rates. There's a certain amount of risk appetite destruction out there, and this will show up in the gold market sooner or later, but right now it's possible that people are just simply taking profit that they've made.
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