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Pay close attention to the US dollar as well, because the US dollar has a massive negative correlation to the gold market.
Gold markets initially tried to rally on Monday but then turned around to show signs of weakness. Ultimately, this is a market that continues to see a lot of noisy behavior, and I think will continue to going forward. After all, we have a line of technical resistance just above, so a little bit of a pullback would make sense. After all, we had bounced quite viciously, so with that being the scenario that we find ourselves in, I believe it is probably due for a short-term pullback.
Looking at this chart, you can also make an argument that we are forming a bit of a shooting star, which is a negative candlestick in general. Ultimately, this is a market that I think is fading rallies, at least in the short term. However, the $1800 level underneath is an area that we need to pay close attention to as it is a large, round, psychologically significant figure that will attract a lot of attention. The market is obviously paying close attention to that level as we have seen it not only bounced a bit, but it is also an area where we had taken off from previously. As long as we can stay above that level, then it is likely that the market will continue to see a certain amount of buying pressure.
If we were to break above the high for the trading session on Monday, then it would show a continuation of the momentum, allowing the gold market to reach the 50-day EMA above. Breaking above that level obviously would be bullish and it could open up the possibility of a move to the $1900 level. The market will pay close attention to that as well, as that has been important more than once. Pay close attention to the US dollar as well, because the US dollar has a massive negative correlation to the gold market. Furthermore, you need to pay a lot of attention to the bond market, because if yields start to spike again, is likely that we will see gold get punished. The alternate scenario is that yields suddenly drop, making gold much more attractive. Keep one eye on the 10-year yield, and another one on this chart.
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