Ultimately, the way we close on Friday will have a huge influence on where we go for the next couple of days.
Gold markets tried to recover during trading on Thursday but gave back gains rather quickly as we had approached the $1750 level. This is an area that has a certain amount of psychology attached to it, but really at this point, I think the only thing that we are paying attention to is the US dollar and of course interest rates in America. At this point, we continue to see a “sell the rally” type of situation, so I think that it’s possible that we continue to find negativity.
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The $1720 level is the next support level, and if we were to break it down below there it could send this market much lower. The market certainly has taken a significant “punch to the face”, and therefore it makes sense that we would see a lot of downward pressure still. We would need to see a complete change in the attitude of the Federal Reserve for gold markets to suddenly turn around. Ultimately, we looked very sick at this point, and therefore I think it’s probably going to continue to see a lot of negative attention.
The $1800 level above could be a significant amount of resistance, so if we could break above there it could be a good sign, therefore showing the possibility of a turnaround. It’s not to we break above there, it’s likely that we could see the situation change. The market breaking above there could open up the possibility of a move to the $1850 level. The $1850 level is an area where we find the 200 Day EMA, and then also have seen a lot of structural resistance. Because of this, I think we will ultimately see that as a target if we do take off to the upside. On the other hand, if we break above there, then it’s possible that the market could go to the $1900 level. Quite frankly, that’s a whole world away, so I think any time we see signs of exhaustion, there will be plenty of people willing to jump on it.
Friday is the jobs report in the United States, so that obviously will have a lot of influence on what happens next, so I do think that the market will pay close attention to it. Ultimately, I think that the way we close on Friday will have a huge influence on where we go for the next couple of days.
