Friday has seen a lot of noise in the gold market, as traders try to get a handle on headlines and interest rates.
Gold
The gold market has been very noisy on Friday sitting just above the $4600 level. Quite frankly, it’s been nothing but chaos all day via tweets and press conferences and threats against Iran and then talks about talks with Iran.
And then on top of that, the interest rates were extraordinarily high. They did level out late in the day at just under 4.38%, which is still extraordinarily high and that still works against gold in general. That being said, as they drop, that adds fuel for the gold market to rally and the candlestick is looking somewhat supported. It’s not all bad news.
I just don’t think we’re going to suddenly see gold take off on a massive run higher like we had previously. I think it’s going to remain a bit of a grind to the upside and unfortunately in this environment, it’ll be the next headline that causes the next headache.
Market Outlook and Technical Support
So, make sure your position size is appropriate and that you do not get too aggressive with your size. After all, at any given moment, we could have an announcement that throws the bond market into disarray, which by extension also causes some real problems for gold.
If we break down below the $4500 level, then I think at that point in time, you have to assume that we are going to go looking to the 200-day EMA as a potential support level. Breaking that would be disastrous.
That being said, on the upside, we could go looking to the 50-day EMA and quite frankly, this is probably going to come down to whatever nonsensical headlines come out over the weekend. So, if there’s still concerns about energy inflation, that works against gold at least in this particular regime.