- The gold market has rallied a bit during the trading session here on Wednesday to break above the $4,200 level.
- The $4,200 level is a large round psychologically significant figure.
- At this point in time, it's worth noting that we are starting to pull back a bit from there and we are a little overdone.
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Ultimately, I think this is a market that will end up being one that short-term pullbacks are more likely than not going to be buying opportunities. The $4,000 level underneath should end up being a significant support level. And I just don't see a world where you decide to get short of this market, at least not at the moment, as there are a multitude of reasons why gold continues to find buyers.
There is the central bank buying of gold around the world. And that of course is a major factor in what happens next. After all, there's a little bit of a permanent bid in the market. If we were to break down below the $3,950 level, then we could open up a move down to the $3,800 level. The $3,800 level was the measured move for the ascending triangle that we broke out of, and the 50-day EMA is starting to race towards that area. That being said, I don't necessarily think that we get that far. I just think it offers a hard floor, if you will.
There are a lot of geopolitical concerns and a lot of tariff concerns. So, I think gold continues to perform fairly well, but really what you're looking for here is a little bit of value and I think value is what you need to see in order to start buying. I don't really like chasing it after an extended move. And therefore, a little bit of patience probably goes a long way in this market.
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