The gold market has dropped again on Wednesday, as we continue to see a lot of traders pricing in lower inflation.
Gold
The gold market has fallen pretty significantly to pierce the $4,000 level, but it looks like we are, in fact, trying to find some type of support there. It's not a huge surprise considering that $4,000 is a large round figure that will attract a lot of attention, and it's an area that's been important previously.
Top Regulated Brokers
So, with this, I think you have to assume that we could get a short-term bounce. The question, of course, is whether or not that bounce can last, and that in and of itself is a bit of a problem. If we were to continue to drop from here, perhaps below the $3,900 level, I think that opens up a move down to the $3,500 level, which is an area that some people have been calling for, and it's an area that's been important in the past, so it wouldn't be a huge surprise by any stretch of the imagination to see markets end up chasing that area.
Ultimately, though, I think you have to look at this as a market that remains a bit soft and a bit dangerous to get overly aggressive in. I do think that we have a potential selloff just waiting to happen because even with lower rates, we are struggling to hang on to any type of gain, and that's been the case for a couple of weeks now.
Technical Breakdown and Correlation Shifts
The lower interest rates and higher gold price correlation really fell apart, and now we're well below the psychologically important 200-day EMA, which, of course, is an indicator that a lot of people will be watching as a potential trend deciding factor. But furthermore, we have to keep in mind that this is a market that is possibly trying to price in the idea of lower inflation.
If that ends up being the case, then I think you have to look at this as a potential breakdown just waiting to happen. Short-term rallies probably find the 200-day EMA as a bit of a ceiling, right around the $4,365 level. Short-term traders, they may take advantage of a bounce, but I would need to be a little bit more convinced at this point.
Ready to trade today’s Gold forecast? Here are the best Gold brokers to choose from.