Gold markets initially fell during the week but found support near the $1200 level to bounce significantly. This is the bottom of the recent consolidation area, and I think the gold is going to continue to consolidate longer term. This means that we will probably go looking towards the $1300 level over the longer term, as we have several times during the year. The $1200 level is massively supportive, and I believe that if we can stay above there, the consolidation should continue. If we did breakdown below there, the market will probably fall apart and go looking to lower levels, perhaps the $1150 level.
The role of the US dollar
The role of the US dollar course has a massive influence on the gold markets, and we have seen the US dollar could be enough on Friday which caused a significant bounce. The Federal Reserve is looking to tighten monetary policy, but less than hawkish numbers came out on Friday that could illustrate just how difficult it is for the Federal Reserve to raise those rates very far. Because of this, gold may have a bit of a bid, but with central banks around the world looking to tighten monetary policy, it’s likely that gold markets will be able to break out of this range anytime soon. If you have the ability to trade over the next several weeks, then there’s a nice opportunity to pick up a bounce. Alternately, if we break down below the $1200 level the market would roll over drastically, and I would change the overall look of gold going forward. If we managed to break above $1300 level above, that of course is the next “buy-and-hold” scenario in the precious metals market.
This article was originally posted on FX Empire